Saturday, October 10, 2009

Wall Street's Naked Swindle

This is so sad. My favorite journalist, Matt Taibbi, writes another scathing article for Rolling Stone Magazine, the third to gain world wide attention as he exposes the Wall Street that collapsed.

Wall Street's Naked Swindle

A scheme to sell fake stocks helped kill Bear Sterns and Lehman Brothers — exposing the counterfeit nature of our entire economy. By Matt Taibbi

Find this article today on the web. Taibbi correctly exposes how the game has been played, and sadly shows us how there are so many regulating bodies that none have been organized to solve the situation.
I find Taibbi a frightening journalist. His facts have been checked, he gains much national TV interview exposure, but continues to work for Rolling Stone Magazine vs. a top news organization, because he will "not be muzzled".

Here he is on YouTube: http://www.youtube.com/watch?v=OqZUbe9KIMs

It leaves me naked, with no weapons, and an army advancing. I'm disgusted, discouraged, saddened for society, and angry.

Friday, October 9, 2009

Investing in U.S. Treasuries



Recent stats show Treasuries in "shift" mode, and it's time to explain some of our "Real $ Portfolio".

We invest 5 to 15% of our total portfolio in Gold and Silver, at all times. During the crash we were at 15%,and we are currently at 5 to 7%.
The remainder of our "cash" real $ portfolio (whatever your allocation is, mine being 50%) is always invested in a "laddering" of various treasury bills/bonds. "Laddering" means we dollar cost average,
buying at all times, and buying a variety of issues.

We currently own in our Real Money Portfolio:

TLT-Long term treasuries
TIPS-U.S. Treasury Inflation Bonds
GLD, SLV, SSRI-All are Gold or Silver ETF's
CEF-Canadian Exchange Fund-a cheaper way to own actual gold and silver bullion, unlike the ETF's above
EFR-Eaton Vance Senior Floating Rate Fund (this is a good alternative to TIPS)
ZTR-Zweig Total Return Fund: this is actually held in our CORE portfolios, this bond/treasury fund currently yields over 10%

"Laddering" means holding various incremental price points, buy ins, on Treasuries, and shifting positions. For example, I am going to recommend selling TLT and shifting assets to IEF, Barclays' 7 to 10 Year Bond fund, or at least shifting a portion of cash assets. I think shorter term IEF will outperform TLT for this period.

Buy: IEF Barclays' 7 to 10 year Treasury Bond ETF at market this week, and continue to buy on any market IEF dips.

Investors appear to be shifting from riskier junk bonds to safer treasuries. It shows in the charts ($TNX) The 7 to 10 year Treasury Bond ETF (IEF) began breaking out to the upside last week, while the best indicator for junk bonds, Lehman High Bond ETF (JNK) fell dramatically. Investor caution is stepping in. We’ll watch this to see if the difference between JNK and IEF shifts below the September low, which would be a sure sign of the market shifting to safety. And safety makes sense, as we’ve already been there a long time.

Thursday, October 8, 2009

When Interest Rates Go Up

There is a body of thought that the FEDS should this time be preemptive and be cautious with their recent statement on interest rates "will be kept exceptionally low for an extended period".

This is what happened, with typical Greenspan babbletalk, from 2003-2004 and what fed the housing boom and the housing crisis.
Most of us know that it is not smart to raise interest rates and make credit even harder to get as we come "out of a recession" (if this statement is true), but any Floydian thinkers that have been with us for years have heard my endless rants in the past about Greenspan and his evil objectivism thinking, easy credit, and the "game" of raising the economy falsely, at the expense of the average Joe, and in the pockets of real estate and financial sector speculators.

Hmm. The FEDS, with the debt created, will also have to sell assets to absorb reserves, shrink the monetary base, and avoid inflation.

Bernanke is a student of the Great Depression and it has served us well in our forced bank stimulus. Let's be sure we understand it: The banks played money games, and nothing was real. AIG and other insurance giants played the game, and Fannie and Freddie expansion without controls (supported by Democrats and Republicans), and soon the banks literally had no money.

The money played became beyond how much money there actually was in the world, and fraud was uncovered from Madoff, to Stanford, and all through it the real government of Goldman Sachs has continued to make their own money from it all. Astute, or ?

Wednesday, October 7, 2009

More on "We are Fucked"


_____________________________
James Howard Kunstler (The Long Emergency-Surviving the Converging Catastrophes of the Twenty First Century) speaks well for Floydian thinking:

"You can't have all the manufacturing in Asia, all the paper shuffling in the U.S., all the banking in London, and all the tourism in Europe. Nations and cultural groups need to have more well balanced economies. If you import all your food, sooner or later you're going to get in trouble. In the U.S. we've offshored all our manufacturing, so if we can't afford to have products shipped right to our doorstop, or if China gets pissed at us (just send Sarah Palin over for three days), we're in trouble. And sooner or later something is going to break down with trade relations, or shipping corridors, or the price of fuel, which is how wars start.
Another reason I say we have a bullshit economy is for about 20 years much of the so called wealth we generated was based on housing prices going up, so people could use their homes like ATMS, borrowing against their value to buy more stuff. We had a so called consumer economy based on easy credit-essentially financed by the rest of the world-which enabled millions of non credit worth people to get into the housing market, driving up the price of housing, leading many of us to believe we were wealthier than they were. And most of us could think of nothing better to do with our wealth than buy cheap plastic crap from China-pallet loads of SaladShooters and flat screen TV's. We let our cities and towns and infrastructure and local retail economies disintegrate, but we didn't care, as long as we could drive our SUV's to the mall, drinking bottled water"

This leads back to my blog last week on "WE are fucked", and sadly, we are. A recent photo of a lady at a Republican led "townhall" meeting showed her with the sign "Keep Gov't Out of our Medicaire". It really says it all.

Most of us as a populace expect the following:

1. Everything that is wrong to be fixed quickly, but we really don't even know all that is wrong.
2. The economy to improve quickly, so things get back to what we were used to, and what is "normal"
3. Obama to moderately make all the right changes that we can all agree on, despite lobbyists and Congress.
4. Housing to slowly return to reasonable prices, where we have home equity, and the stock market to continue its rise.
5. That Obama is preaching pure socialism and within a few years we will have nationalized everything, and have a massive national debt.

I'll share with you #1-4 won't happen,and #5 is a perfect example of where FEAR propaganda has been used by a "vast right wing conspiracy" (which does exist) has taken a calm man that wants only to distribute wealth fairly (not redistribute to the poor), but to make it fair in how to make money.

As most of you know I believe the chances of the average Joe in America (person earning less than 40k a year) actually getting ahead are nil. The decks are stacked against these folks, and the "from the bootstraps" success stories are statistically far from a norm.

When I say repeatedly "we are fucked" it is the provocateur asking you if YOU understand the depths of what we are "undoing" and the turmoil that is being created, not in the name of good, but of politics.

Sunday, October 4, 2009

Investing in our "Real $ Portfolio"

The chart listed above is for Eaton Vance Senior Floating Rate Trust (EFR). This is a senior secured floating rate bond fund that ranks well for inflation safety with gold, real estate, and TIPS.
This trust is trading at a discount, and yields 6.6%. We'll recommend it in our CORE portfolio as a new long term buy and hold.

We are building inventory in "real $" at market tops. We own Gold, Silver, and U.S. Treasuries, and see this trust as a good safety addition to our CORE accounts for a long term hold.