Memorial Day = Celebrate and Remember…
My father, my uncle, my father-in-law and mother-in-law – all either served in WWII directly or as part of the government’s efforts along-side the war. I always use today as day to remember "What those folks did" and what they gave their lives defending. Well – another element occurred this week in California – a Lawyer named Marco Gonzalez, a lawyer for the Environmental Rights Foundation, won his day in Court on Friday. You see – Mr. Gonzalez represented the environment in the case of city fireworks displays needing an environmental impact study prior to display. He claims: "There are a whole host of impacts that we know occur from fireworks shows, from marine mammals, to marine birds, to water quality, to traffic, to noise, and to the air. We want it studied and we want it mitigated." So, the City of Chila Vista has cancelled their July 4th Fireworks show, and LaJolla (where it all started) is going to have to seek some form of injunction, so they don't have to abandon their own show – because there is simply not enough time nor money to create the environmental study. In reading my letters over the years – my stance is that the EPA and NOAA are much more about "control" than about the environment. So much for celebrating patriotism and our history – so celebrate Memorial Day before that’s gone as well!
In terms of the economy, QE2 cost $600 Billion and was supposed to rescue the economy. The Ben Bernanke created (maybe) 700,000 full-time jobs (from 111.8 million to 112.5 million employed). That’s $850,000 PER JOB! (Couldn’t we have just paid that to people instead?) Oh but just wait:
- housing prices are lower than before QE2,
- economic growth is slower than before QE2,
- the dollar is worth less than before QE2,
- inflation is higher than before QE2,
- the number of part time workers has gone down by 600,000 (almost offsetting the 700,000 gain)
- the percentage of the population at work is actually lower today (58.5%) than before QE2,
- AH but the stock market is HIGHER than before QE2!
Maybe Steve Forbes had it right when he wrote:
End of the Financial World by Harold Camping – New Data = October 21st:
Consider the following:
- US Debt Limit = $14,3t
- US Money Supply = $9.079t
- US Debt Held by Foreign Counties = $4.544t
- US Unfunded US Liabilities = $113.96t
- US Tax Revenue = $2.188t
- There is NO WAY to pay this back and NO END in sight…
OK – so what about Greece? Since 2008 their unemployment numbers are up over 100% so that there is a 30.1% unemployment rate Greece. So obviously they think that the ‘end is near’ – they’ve even given up trying!
And the End is Definitely Near in housing – as Richard writes:
- Good News = Freddie Mac announced this week that the 30 year fixed mortgage rate was at 2011 low’s of 4.6% and the 15 year was at an incredible 3.78%!
- Bad News = The banks continue to reign in lending, increase credit qualifying criteria, and constantly change underwriting standards.
- Remember those $1.4t in subprime loans that were originated in the heyday of lending. They came as a result of the 11:1 leverage and securitizations that were allowed. And that created an estimated $140t in exposure – all on the back of a $1.4t in assets.
So add the $140t in exposure to the above US numbers – and potentially Harold Camping has it right – October 21st (financially speaking) may be the Financial End of the World as we know it ☺ So please Celebrate this Memorial Day!
On May 2nd the market was up at 12,876 and we said that the market felt “heavy.” From that day, the market fell from 12,800 to 12378. We did not short the market – for fear that they’d pull a fast one on us and goose it higher – but we played a couple bounces on the way down.
So what happens now? Our guess is that we are going to see a move higher from Friday's close. We think that they'll throw the kitchen sink at things trying to offset the worry over the bogus "ending of QE2". But, I do NOT think we'll regain that 12800 level. I think we'll come up short and then fade and fade hard. We're going to lean long, and scoop up what we can before they pull the rug.
Be safe out there folks, have a great weekend and by all means give thought to the fine people that have served this country - no matter what the capacity. To my Dad, uncle, father and mother-in-law – I salute them and will have a drink in remembrance of them.
Not much has changed actually:
Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF.
We continued nibbling with small positions on SLV, SLW, GLD (and some gold miners as well) all of last week – and were rewarded handsomely - and continued to purchase physical silver and gold with the profits on these short-term holds.
Honestly – my purchases are smaller than normal and we’re holding them shorter than normal so tweeting about them almost defeats their purpose – but the show must go on. Please be safe out there!
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