June 17, 2007
by John Galt
I just love going on vacation. It's like a refreshing breath of fresh air where I can act like the rest of the sheep for a week, take in the blessings of God's beautiful earth he has bestowed upon us and really not care too much about what is going on in this world, where we have watched many document what has been happening to the once proud nation known as the United States of America. You never really appreciate what we have left here, until you go to another country and realize that we still have it pretty good compared to others. So the question of the weekend is simple:
What, me worry?
The answer: No.
My readers and listeners might well have thought I've lost my mind. Have no fear. After years of paying attention to current events and listening to the advice of many others I do not worry. I am about as prepped as I can be so anything added now is what could be called "gravy" in some circles or just more prudence in others. The economic situation, despite the cheer leading efforts of the residents on the Denial River, is doing exactly what many of us thought it would; unwind in an ugly fashion. This one notice I received while I was gone from Dow Jones Newswires should have been the red flag, blaring siren and slap upside the face of the pollys, yet it was not. For those that still have their heads in an uncomfortable position and physically impossible for the rest of us, here it is:
"US Treasury Awards $8B In Reopened 10-Year Notes At 5.230%" at 1:18:21 PM EST includes this: The Treasury received no bids from foreign and international monetary authority accounts on a noncompetitive bidding basis.
Now while this sleepy little tidbit of news is not disturbing if you have been a regular reader of the material I write and post, if you have not been awake, this was not a surprise. It means that the foreigners, gasp, are doing what they said they would do. They wanted higher yields and the fraud we perpetuate as a stock market is not safe enough for them to invest in. Despite years of financial market fraud and deceit, we the sheeple are still expected to dump our entire future into this casino and accept the advances on paper as "wow, I'm rich" and the declines as "the normal ebb and flow of markets", both of which can be honestly appraised by anyone with more than one working brain cell, even my critics. The markets when priced in real money or commodities are not exactly setting the world ablaze. Add in the fact the real rates of inflation are outpacing the alleged gains and accelerating the losses in the equity markets and your 401K statement might as well be a Disney comic book or toilet paper.
As a huge student of history, I only have to look back twenty years to see the kind of equity market set up we once faced and the same stupid Federal Reserve decisions which caused the crash of 1987. The same situation is setting up, but with far more dire consequences for the U.S. economy than at that time. If you look at the current status of the U.S. dollar, it's not exactly done much more than a dead cat bounce of the lows in the 81 range. That fact should cause even the most casual critic or polly to turn off bubblevision for five minutes and see the handwriting on the wall. But alas, my critics and those who subscribe to the theory that this wasn't a housing bubble and it's just a correction, will not see the semi that is about to hit them. The Fed is looking more and more like there will have to be a short term rate increase to save the dollar and defend against the inflationary pressures which are building up. Despite their best efforts to manipulate the numbers, inflation
is still on pace for a real increase of over 11% annually and that is where the business community is most concerned. The hidden tax on America's wealth is showing up everywhere, yet as a friend of mine likes to say "the band plays on". What this hidden tax is doing is finally putting pressure on wages to be increased and as that happens, you will begin to see what I call the "Exodus". Those in the financial know can see it as plane as day. Heck, even old Bubba and Ms. Hillary know what's coming.
Do you?
Probably not. The fact that the super wealthy are liquidating their U.S. equity holdings quietly but rapidly should be some sort of an indicator. The Denial River though flows through some people's brains and the critics will say what they always do which bothers me that they preach the "Party on Wayne, Party on Garth" approach to investing without realizing what their words inspire stupid people to do. The only safe approach is a slow, steady, and intelligent selection of investments to protect your family and it's future. I just happen to be a big believer in physical silver, which is safe, sane and always will retain some basis of value in trade or barter even as our society implodes. When the collapse hits, paper will be useful in only one room of your home, and that room just happens to have a porcelain throne in it. My preparations have me at the point where I do not worry much any longer, I just observe. Sometimes it's better to be in the stands than to be on the field. Except in this case, some of the cheerleaders are pretty darned ugly and it makes me wonder just what kind of moral character these folks have, urging average citizens to dump their futures into a black hole as safe as a roulette wheel wager in Vegas.