Posts Categorized: Bill Holter
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As I alluded to a couple of days ago, “look around, what do you see?”. People who own precious metals are quaking in their boots at EXACTLY THE PRECISE TIME they should be comfortable. We have gotten many “scared” e-mails recently, some from people I would have never guessed. Even a $10 move down in gold has sparked fearful e-mails…but why?
It should be clear to you now, the “unwind” has begun. Jim and I tried to tell you this a couple of months back, now there is absolute evidence. Look at real estate in many parts of the world. Australia, China, London, Vancouver, New York and now even San Francisco. The most important thing to look at is “volume”, as price always follows. Pricing, as it did back in 2006 has gotten to unaffordable levels…and banks have begun to pull back on lending. Ask yourself this simple question, where would pricing be if everyone had to pay cash for new purchases? I am not sure the answer but it would surely be less than 50% of current pricing. “Credit” is the reason real estate attained the values they did, lack of credit is now reducing sales volume…and thus pricing.
Then we can look at autos all over the world. Asia, Europe and North America, all markets are soft and the build up in “sub prime” auto loans has exploded. Any discussion of credit and sub prime in the same sentence should certainly not leave out “student loans”. This sector is now well over $1 trillion. Yes, for a good cause I suppose you could say, but we now have an entire generation in hock before they even leave the starting gate? Not to mention, college grads today are not exactly what their parents expected when they first wrote their checks, rather they tend to melt under pressure. Is this a “solid credit”?
Note: In my subscription article below (now available publicly) FAKE!!!, I made an error. The article with the picture posted of Anderson Cooper turns out to be 10 years old and not current during Florence. The timing does not change the fact that he was standing in a ditch for “effect” with cameramen just feet away in a foot of water. He could have done the shot standing on dry land with high water behind him but would have been less interesting? My article was written Sunday for subscribers before the picture was vetted as being taken 10 years ago. We try to be accurate, in a world where maybe the majority of news is fake it is a daunting task!
Life is different than it used to be in many ways. The pace is certainly much faster. Making ends meet, or even getting ahead is much more difficult than was just 20 years ago. Information overload is another recent problem that did not used to exist. While I am thinking about it, the following is my opinion which as of now, I am still allowed?
The most obvious change has been “technology”. We now have cell phones (actually portable computers), computers, GPS in more efficient autos, movies and TV on demand, social media, etc. etc.. All of these things were supposed to make life more efficient and thus easier. I would say they have, and they also have not because of some of the unintended (intended) consequences. Just a simple example would be video games. Kids used to be outside all the time and playing games or sports, now they are glued to a screen “gaming”. Forget about the fact these kids grow up out of shape, gaming affects the way these kids think. I would submit it also affects the way parents think, so many today consider video games, hand held or otherwise as a free “babysitter”?
Feel free to share, if you wish.
Please feel free to share.
As you might know by now, Jim and I will be interviewing with Greg Hunter tomorrow for early Sunday release. We plan on talking about the current “technical” dollar short created by all the emerging market dollar loans currently on the books. Richards Russell first spoke of this and called it the “synthetic” dollar short. You see, when a borrower from a nation with a currency of their own, borrows dollars, the loan must be paid back in dollars. This creates artificial/short term yet very real demand for dollars when the loan is paid back.
What I want to talk about today is “MOPE”, management of perspective economics and give you a little background as to what to listen for when Jim and I talk. I’m doing this in the hope it will make listening to the interview more fruitful rather than listening to it cold.
So, Jim coined the phrase many years back to describe a situation where lying about the current fundamentals could be supported or confirmed by pricing in markets. In other words, “the economy is great, just look at the Dow Jones”! Of course, markets were taken over by machines that used the fuel provided by the central bank(s) and lowered interest rates. It became one glorious and they hoped, self sustaining circle (bubble). The thought was, if markets are up then people will feel good and then borrow and spend more. They were right, but the problem is the game has “no ending” because after markets close for the day, they must reopen again the next day. What I mean here is, no matter what levels the markets got to…there is always tomorrow to deal with.