Why France could become the biggest danger to Europe’s single currency
Posted on 11/16/2012 3:48:00 AM PST by blam
There's A Lot More To The Stock Market Sell-Off Than The Fiscal Cliff
Comstock Partners
November 16, 2012
While the fiscal cliff problem has absorbed almost all of the financial media comment since the election, there's a lot more to the stock market decline that has virtually gotten lost in the discussion. The market actually topped on September 14th and has trended down ever since. Most importantly, the U.S. economy was a lot weaker than the consensus believes before Hurricane Sandy became a factor. In addition Fed policy is becoming increasingly ineffectual, earnings forecasts are coming down, Europe is officially in recession and China, as well as the other BRIC nations, is slowing down.
Although nobody knows the outcome of the fiscal cliff situation, it is likely to be settled, if not before year-end, then in the first part of 2013. However, even if this happens, the solution will probably entail some combination of lower government spending and increased revenues----in other words, a tightening of fiscal policy. While a solution is surely better than a continuation of confrontation, a tightening of fiscal policy creates further headwinds for the economy in the shorter term. Moreover, an agreement on the fiscal cliff does not solve all of the other serious problems facing the economy and the market.
Most serious of these problems is the U.S. economy itself. Although it may be doing better than most other countries, that is damning it with faint praise. Specifically, the highly-touted consumer recovery, when examined closely, is built on quicksand. Yes, after lagging earlier in the year, real consumer expenditures has jumped by 0.9% over the last three months. However, during that period real disposable income actually declined by 0.2%.
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(Excerpt) Read more at businessinsider.com ...
“Increased revenues” the man says........any TAX INCREASES in this environment will see lower Treasury Revenues.
I know a guy who cashed in his IRA, will pay the penalty, and is buying gold and silver. He’s not comfortable with mutual funds and the market.
Why France could become the biggest danger to Europe’s single currency
A word of advice for anyone who is considering such a move ... When you hear TV and radio commercials for companies that are selling gold and other precious metals, just remember how commonplace this type of ad was a few years ago -- with people hawking real estate deals.
I would say this...the next five years will be uncomfortable.
First, whatever Congress and the Senate craft up for sequestration...it’s strictly a six-to-twelve month band-aide....nothing more. The media won’t lay it out in simple terms but it’s simply to buy breathing room.
Second, as long as the economy fails to take off...the fiscal ills will just continue to mount. By the end of 2013...without any recovery (figure nine to ten percent unemployment by the end of 2013)....this temporary band-aide will come to an end, and massive cuts will occur or some miniature sequestration.
Third, most folks will decide by spring of 2013 that the taxation on stock profits are such...you might as well put your money into bonds. I suspect that this was the President’s general tactic from day....convince millions to buy into bonds and dump regular stocks. This will ensure companies go into spiral for the next three years.
Finally, this observation...you could have a better economic policy developed by a 2nd year Iowa State economics student...which really tells the story of how lousy things are with White House economics planning.
U.S. Fiscal Cliff, Asian Currency Wars, Buoys The Gold market
“You have to choose between trusting the natural stability of Gold and the honesty and intelligence of members of the government. With due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for Gold,” - George Bernard Shaw, 1928."
If massive inflation is what is driving people to buy gold, they'd be better off buying assets that generate income in U.S. dollars. As the dollar loses value to inflation, the income produced by those assets will typically rise accordingly. That's why the same apartment that rented for $100 a month many decades ago will now fetch $1,200 per month today.
Once you buy an ounce of gold for $2,000 you are stuck with it. You can put it under your mattress, hide it in a safe, etc. It doesn't do anything for you while it is sitting there, and you have no control over what the price of gold is going to be when you need to sell it for U.S. dollars.
That’s what you should have said in post #6 instead of calling the guy an idiot.
Markets are generally not event driven, they are trend driven. The trend is down as pointed out in the article. Worse, there are virtual air pockets under a lot of stocks. Note Apple topped around 720, yesterday it closed around 520, an almost 30% haircut in a few months and worse they sell a lot of profitable product.
The key element underpinning all markets is earnings. Earnings are heading down, for two reasons. First taxes are going up. Second, disposable income is dropping in both real and inflated dollars.
Anyone investing in financial instruments now is betting into a head wind of monumental proportions...shrinking Price earnings ratios and decreasing revenues. Eventually this will come around to hurt anyone who still has a sound IRA because interest rates too are virtually non existant. So, except for hard assets like real estate and guns(!), there is no where to hide your worthless banknotes. Worse, the G is poised to seize all guns soon too.
In other words, welcome to the Obama gulog comrade.
There's no reason to give financial advice to someone after he has made a financial decision that I never would have advised.
You would trust a communist like Shaw to provide you with investment advice? Gold + Silver are very high right now.
Best approach is to look at daily price of gold for the past 90 days. If it has not had an all time high, approach it very cautiously if at all. If you are holding gold, get out.
No new highs lately means trouble for commodities.
There are many variations, so test them out before following any of the above.
Do you have insurance on your house?....car?
WHY?????...you'd be an idiot not to, right?
Whats wrong with a little “financial insurance”?......IMHO anyone that does not have some financial "physical" insurance is an idiot...
Insightful analysis, my good man.
My homeowners policy readjusts to account for changes in value. I can also change the terms of my homeowners policy and reduce the premium. Net worth insurance via PMs does not.
My homeowners premium has remained fairly stable. My PMs have gyrated a lot over just the past 4 years and not always in a good way.
The dollar has strengthened in terms of other currencies. Germany is demanding repatriation of their gold stored in the USA. The situation is such that gold and silver could be manipulated downwards easily and quickly. Silver and gold have traded pretty flat recently. I’ve been hearing *going to explode upwards* for years. It is difficult to see.
Someone said that the PM sellers were willing to trade their store of value for worthless fiat because they did such a high volume. Well, that volume is in fiat. Others advocate *junk silver*. When silver was at $40/oz, the trade was $1.25 in face value pre-1964 coins for $40. Most people look at that and see no reason to buy. To realize the silver content, takes a lot of effort. It is still coinage, with a recognizable face value. Take a silver dollar to the bank and they will give you $1.
It just doesn’t compute.
Bookmark.
It just doesn’t compute.<<
are u aware of Gresham's law??.....
as to taking your silver dollar to the bank....Stand outside the bank and offer it for $10 .....You wont own it for more then 3 customers...lol...stupid people
and it can be “temporarily” manipulated down (and I expect it to be again)...but the situation of the last few manipulations resulted mostly in higher premiums to buyers, not sellers!....That alone tells you something...
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