More of the usual very interesting stuff .. even IF you dont' invest, and I surely don't. My family lost all their dough in 1929 during the crash; I was thus instructed:
NEVER INVEST! NEVER!
Sure can't lose "your shirt" following that advice.
Only you'll never wear anything more than a "Republican cloth coat" if you do follow that as yer family motto. And a damned good thing I discovered the down parka, isn't it??
Still observing the commentaries and actions of those who wear fur coats is always highly instructive. And I do do that!! (remember, this guy thinks royalty is a Good Thing! more stable. The truth of the matter is England was FORCED to pick between empire and democracy - and although it HAS royals rather than an imperium can be said to have more feedback from citizens, actually, than the United States .. but I digress!! What else is new?)I did a piece herein, about liars, derivatives, hedge funds, MORALITY that somehow got lost in the shuffle and "only" played in the Hongkong papers, showing how many LIES were afloat as to their efficacy and SAFETY sometime back. The folks at home just thought I was joshing, but I really did watch their rise knowing that "the chickens would come home to roost" and I outlined the reasons that that was - and to whom to point the finger(s) of blame. This was my first public outcry against Hank Paulson, the PPT, with a real nod to George H.W. BuZh who really let the market FRY, seems like ON PURPOSE. But those are the games of the WEALTHY - let's put our ear to the wall as the rich speak, but with Good Wisdom ..
Ssshh ...!<<:>> $ <<:>> $ <<:>>
We still think the tide has turned. Stocks are going down...along with housing .
But gold is over $800 again...while the dollar is mostly steady.
What’s ahead for the dollar? As we said in The Economist , its long-term value is zero. But the fact that The Economist picked up our quip makes us worry. Bashing the dollar has gone prime time. So, the buck could actually be over-sold – at least in the short run. Will it rise against the euro? The last report we got, put Euroland cash growing at more than 12% per year. Not exactly Zimbabwe, but still three to four times faster than GDP. It’s not just the dollar that will go to zero. All paper currencies will get there. Which one takes the lead now? We have no opinion.
And who says you can’t make money in hedge funds ? Hedge funds must be one of the dumbest asset classes ever invented. It is like getting someone to put coins in a slot machine and then splitting your winnings with him. Over time, you will lose all your money...but occasionally, you can get lucky. Look at this...and pity the poor dopes on the other side:
“A Californian hedge fund has made more than 1,000 per cent return this year by betting against U.S. subprime home loans, making it one of the world’s best-performing funds of all time,” reports the Financial Times .
“Lahde Capital, set up in Santa Monica last year by Andrew Lahde, last week passed the 1,000 per cent mark, after fees, following the latest leg of the credit market turmoil. The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance.
“The decision to use derivatives to short, or bet against, low-quality U.S. home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time, making well over $20bn in total so far this year.
“However, Mr Lahde, whose fund is one of the smallest specialists shorting subprime, has now begun to return money to investors, telling them in a letter: ‘The risk/return characteristics are far less attractive than in the past.’
“In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession - which he also predicts.
“‘Our entire banking system is a complete disaster,’ he wrote. ‘In my opinion, nearly every major bank would be insolvent if they marked their assets to market.’ He also said he would be putting some of his own profits into gold and other precious metals.”
Hmmm...looks like a little bit of luck – and a good understanding of the actual trends at play here. Our colleagues, Mish and Brian, over at The Survival Report , have profited from the volatility in the mortgage markets – specifically from Countrywide’s wild ride.
In fact, subscribers to The Survival Report were perfectly positioned to profit when Countrywide Financial Corp. hit the skids. For the full report, including the triple-edged “housing hedge” offered therein, read on here .
*** “The economy has slowed down...but just a little,”explained a colleague in Johannesburg. “
Here in South Africa, we’ve had very good growth over the last few years. Now, GDP growth is down to about 4%...but it’s still good.
“And there’s a lot of activity. People are starting new businesses. People are making money. In fact, there’s probably too much activity. Traffic is terrible in downtown Johannesburg. So many people are getting cars. And we don’t really have the infrastructure to keep up with them. What’s more, we’re running out of energy. They cut the power off a couple of hours at a time. There just isn’t enough capacity...and it takes a long time to add new generators. So, they try to apportion what power there is. We have to run a generator whenever the power goes out.
“Yes, there are a lot of problems here. But the story is basically good. People who never had any money before are entering the modern economy. South Africa is booming. And I think it will continue to boom until 2010. We have the World Cup coming. They’re going to spend a fortune on transportation and infrastructure to get ready for them...unless the money is stolen.
“Tomorrow, the central bank is expected to put up its key lending rate to 14.5%. But just look at the headline: ‘Consumer confidence on the rebound.’ They’re putting up rates to stop inflation...but inflation isn’t that bad...just about 6%.”
Until tomorrow,
Bill Bonner
The Daily Reckoning
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