Tuesday, March 5, 2013

Can You See It Coming? "Fund'Em"

By the time most people see the giant systemic "two-by-four" being swung at their collective heads, it will be too late to duck - Dave in Denver, circa 2005...That systemic two-by-four is getting a lot closer - Dave in Denver, 3/5/2013
A long-time colleague sent me an article about a former Countrywide Mortgage employee turned whistle-blower.  The whistle-blower was completely amazed that Angelo Mozilo, Countrywide's CEO and the country's pioneer in the massively fraudulent mortgage bubble, was never put on trial.  Not only that, but the whistle-blower's $3+ million court case award for wrongful termination from Countrywide/Bank of America was recently overturned by California's Appellate Court.  You can read about just how corrupt Countrywide was and other sordid details here:  LINK

My response to the above article was this:
Don't hold your breath on the Judiciary Committee hearing of Holder.  Holder will be well rehearsed and we already know what the questions will be.  Don't forget, Holder is the guy who wrote the Marc Rich pardon letter that Clinton signed as he was walking out of the Oval Office for the last time.

This country is completely corrupted from State legislatures to the Supreme Court.  Look at that verdict overturn in the article.  Corrupted court system.  The apparatus has been put in place, for those in a position to do so, to steal everything before the country collapses.   IRA/401-k's are next.

The bottom line is that the citizens of this country are ultimately to blame.  Guys like us sit around and dig up the evidence, yet we do nothing.  95% of the middle class could give a shit. They're robotic drones who basically go through the day lapping up what's fed to them and losing themselves in prime time garbage tv.

Anyone who thinks our system can be saved is hopelessly naive or tragically ignorant.
I bring this up because Charles Hugh Smith hits the cover off the ball with an article in which he outlines some of the key sources of "energy" fueling that two-by-four being swung at our collective heads:
At ~18% of the labor force employed part-time, those 50% grads who do not obtain full-time private employment outside health care must compete for the 1 of 5 jobs in the labor force that are part-time, implying that no more than 59-60% of college grads will obtain ANY employment under current labor market conditions, leaving ~40% of grads with no prospects for earning purchasing power.

Is it a surprise why student loan delinquencies have begun to soar? How will the housing market grow with as many as 40-50% of high school and college grads unemployed, underemployed, or unemployable?

From my experience, perhaps as few as 10% of the population know the information above. Most in the top 10% don't know because they are largely unaffected and thus don't care and will not be persuaded that they should care until they have to (i.e. when their children experience the aforementioned conditions).
This is a MUST-READ article that you should be able to knock off tonight in between a couple commercial breaks during "American Idol:"  The Hollowing Out Of Private Sector Employment


  1. Michael SchumacherTuesday, 05 March, 2013

    get used to the following two words: Force majeure

    If/when it is allowed to go 'pear-shaped', that phrase will be enforced like no tomorrow. Hypothecation be damned.......they (system) will extract its wealth from the rest of us.

    No disagreement with what Dave has said and proved......just a little heads up from someone who has seen the future. If you liked what happened at MF global you are going to love whats coming down the pike.

  2. Don't worry...Ben has a plan....


    members only.... of course.

  3. Hey Dave.. Thanks for reminding me that Idol is on tonight.. I will watch! 1 Kg Lunar Dragon.

    PS.. Have the F-ing miners bottomed yet... OMG this is hard to watch.. I want to buy so bad.

  4. Maybe we'll get lucky and the planet will experience a global fatal pandemic or some other catastrophic event that will cull the herd by 50 to 70 percent before financial armageddon hits. I'm all for a new world order that says if you can work but choose not to because you would rather live off the sweat and hard work of others you starve - period. If you can't afford or you are not intelligent enough to have children, you can't have them - period. And no politicians - find another way to have the people represented because this system sure as hell isn't working.

  5. Although the fundamentals suck, nothing can stop the Dow achieving a all-time high. The correlation between the Dow and PMs seems to have broken. The sentiment in the PM market is very low. It is really painful to hold PM at the moment.

  6. I think the end game is near. I think it starts this year.

    On a personal level, I am trying to decide whether or not to sell my house and leave the country. I am not interested anymore in trying to save a bunch of fucking sheep that aren't worth saving. I think it's time to put up or shut up. The government is arming itself with ammo, tanks, and drones. The problem of course is where the hell can you go to escape the economic wrath they will bring about. That is the big question. Maybe Australia.

    1. In my humble opinion, Australia is not a good choice. Horrible heat in summer and occasional sandstorms. Why not choose Canada or maybe Ireland?

  7. Unfair To Those Who Work For A Living

    The net effect of all this is that on average, every business day in March will see the Fed effectively seed a new $4.25bn AUM investment firm whose sole goal is to buy, not sell, securities. Think about that, out of thin air, a new $4.25bn competitor is starting up each and every business day in March, courtesy of the good folks in the Marriner Eccles building in DC.

    Some of you have worked in asset management your entire careers. You know how hard it is raise assets. You know how long it takes and how important it is that your investors know that you can both buy AND sell assets effectively in order to earn their business. You know how hard you must work to study your markets, sectors and companies to be able to understand the fundamental drivers.

    It must be hard to sit by and watch while the Fed creates a new $4.25bn competitor every business day where the sole goal of that money is to buy simply because a Princeton academic thinks it should. The Princeton academic thinks stocks should be high, so they are. The Princeton academic thinks bond yields should be low, so they are. Period. Of course this makes a mockery of those of you who actually try to understand fundamental value, but hey, the Princeton academic gets what the Princeton academic wants. The devil take the hindmost.


  8. The NINJAs Are Back: Buy Life Insurance, Get A No Doc Mortgage Loan For Free

    First we got GM subprime interest-free car loans, then we got subprime ABS securitizations, then we got soaring student loan defaults and delinquencies, then we got the opportunity to sell and short student loan exposure, and now, finally, the credit bubble is complete as FastFunds Financial Corporation is proud to announce that it has acquired exclusive mortgage servicing rights for an "Innovative New Mortgage Product." Why is it so innovative? Because it requires no credit verification, no credit history, no docs and needs no personal guarantees. In other words, it is the very worst of the worst lending practices we saw in 2006: the NINJA.

    But there is a twist: "all that is required to qualify for a mortgage loan is qualifying for a life insurance policy, a down payment that usually amounts to 10% of the purchase price and verification that the borrower has the financial ability to pay the monthly payments."

    In other words: buy life insurance, get a subprime, no doc mortgage for free.

    Ye olde days are truly back.


  9. Finally some good news for long suffering Hecla shareholders. Alamos CEO says has "good support" from "large shareholders"

    March 5 (Reuters) - Alamos Gold Inc said it was close to blocking Hecla Mining Co's rival bid for Aurizon Mines Ltd , and had the support of other "large shareholders."

    Alamos said it had 29.5 percent Aurizon shares as on Tuesday afternoon, including the 16.11 percent stake it already held in the company.

    "I have been talking to other large shareholders, and collectively we feel that Hecla's proposal is a very very weak bet," Chief Executive John McCluskey told Reuters.

    "By virtue of the fact that approximately 29.5 percent of the shares have already tendered to our offer, it's a guess we already have a strong enough position to block (Hecla's) plan of arrangement from going through."

    If this goes through Baker will lose face in the eyes of his backers (frankly if you can't pull off a cash offer recommended by the management you should pack up your bags).

    In addition Baker has out a value on Hecla and has put a value on what the board considers to a be a reasonable premium for control. That's game on in the M&A world. That is if anyone still has the balls to hit the market with an unsolicited cash bid.

    Right now I think $7.00 would seem to be totally reasonable in the light of the AURIZON offering and you could put up a case for even less.

    1. Case you missed it Baker is proposing to hedge AURIZON's gold. Hedging gold at $1,580 per oz a long term hedge. Baker belongs in the funny farm Alamos Gold is right.

  10. Why cyber currency Bitcoin is trading at an all-time high
    Bitcoin sounds like something from science fiction: A purely digital currency, created by an anonymous hacker, that operates outside the world's traditional banking systems. The four-year-old currency is very real, though, and it's trading an all-time high, tripling in value in the last two months alone.

    One bitcoin is was worth about $40 U.S. dollars on Tuesday, and surged on Wednesday to nearly $49. That's up from around $13 in January, and 5 cents in 2010, according to Mt. Gox, the bitcoin market's main exchange. On that and other trading sites, buyers can swap their digital coins for cold, hard cash.

    Watchers of the alternative currency attribute some of bitcoin's rise to the recent decision by several popular-in-geek-circles vendors to accept the coins -- most notably, blog hosting site Wordpress and the online community Reddit.

    "These guys are killing it on retail," Peter Vessenes, chairman of the trade group Bitcoin Foundation, said of bitcoin's growing acceptance with merchants.

    Bitcoin was created in 2009 by an anonymous developer using the pseudonym "Satoshi Nakamoto" -- the Japanese equivalent of a bland name like "John Smith." It has no central-bank backing. The idea was to create a currency that's free from government intervention and can be used to conduct transactions without hefty exchange or processing fees.

    One deal chronicled on the bitcoin data site BlockChain involved a transfer worth nearly $80,000. The processing fee was 1.8 cents. Beat that, Western Union.

    Coins are "minted" by a network of computers running specialized software on powerful (and often pricey) hardware systems. The software is designed to release new coins at a steady -- and finite -- pace. Right now, one new "block" of 25 bitcoins is generated roughly every 10 minutes, adding to the pool of around 10.8 million circulating coins.


  11. Ed Steer: Don't invest in monetary metals miners if they won't defend themselves

    "However, I'm not allowed to comment on any one company, as I'm not an analyst. You'd have to take that up with Jeff Clark or Louis James.

    "I know you read my column every morning, so you will have noted that the entire sector is being abandoned by the investing public, and it has nothing to do with your (or anyone else's) assets in the ground or your excellent company-specific news.

    "The issue is that the mining industry will not deal with the real problem out there, which you know about all too well, and that's the outrageous short positions held in all four precious metals by a handful of banks -- JPMorgan Chase, Bank of Nova Scotia, HSBC USA, plus a couple of minor players. Note the attached 'Days of World Production to Cover Short Positions' chart.

    "If those obscene and grotesque short positions weren't there, the prices of all four precious metals would take your breath away, as they would be many multiples of what they are now, and we wouldn't be having this discussion, as the mining companies would be talk of the town and the executives of same would be like gods. As a glance at the chart will show you, these outrageous short positions exist in only four commodities -- the precious metals -- and your metal in particular, silver.

    "You, or a group of silver mining companies working together, are going to have to bell this cat sooner or later. This is where your real fiduciary duty lies, and I know I can speak for all of your stockholders, the real owners of your company, the sooner you get started the better. And if the idea of confronting the "will of Mordor" is too much for you or the industry, there are other ways that you can make a difference. Withholding production or buying into offerings from Sprott or Central Fund of Canada would be a good place to start.

    "I'll see you at the Vancouver conference in June.


    "P.S. I still own your company's stock, but on the next major rally I will be looking for the exits on virtually my entire portfolio, as I'm appalled by how badly your industry has sold its shareholders down the river. I'll buy the metal itself with the proceeds. The investing public shouldn't have to put up with sort of crap -- me included."


  12. Best article I have read so far, Dave. Absolutely right on!

    Since I live in Nevada with high unemployment, I see the affect on people's lives. My apartment complex is looking like a ghost town. The problem is that the State Officals here still act like its pre-recession and that everything is getting rosier. How come jobs are getting scarce? How come wal-mart has less employees around than ever before (one of our biggest employers)? The state wants to continue fringe benefits to public workers while increasing taxes. It can't even afford what little it has but it will by tax-and-spend-it-all, kicking-the-can policies.

    Next year, voters will get to vote on an "education tax" bill. We keep funding an university system that is just as corrupt and blows money like a damn dope addict. I used to work there. The younger generation is getting screwed into a debt that will eventually equal a 30-year house payment. All that so they can be a bagger at a grocery store or a prostitute on the streets. All so that the elite in the University System can live well (many have ties to state government). So many people I have met lately have defaulted on their student loans and have told me that it's a large amount. It's going to collapse; it's completely unsustainable but the states will tax the people to death to keep it running.

    1. Ya but MJ, you got Harry Reid working for you!! LOL

      Love those signs: "Anyone Butt Harry Reid"

    2. But, Dave, it was the Wealthy Republicans in Nevada that got Reid re-elected. They did a smear campaign on Sue Lowden as they felt she could beat Reid (remember those "chicken wings for doctor visits" videos at the time?). They knew Reid could beat Sharon Angle and felt they would have more power and pull in DC with Reid as Majority Leader than with a newcomer. Party titles are just that: "titles". Reid is in DC bcause he plays to both parties. The bickering we see on our tv screens is just a farce to keep the sheep doped while they're being sheared and prepared for the slaughter.

      The funny thing is that Sue Lowden got appointed to head the Board of Medical Examiners shortly after her lost. She is a wealthy casinos-owner queen and has no real experience in medicine but it's all about who you know and how much clout you have.