Sunday, October 26, 2008

Get into Canada

Get into Canada, financially speaking. The Canadian dollar is ludicrously undervalued vs the USD, we have an economy that produces basic things the rest of the world needs (ie goods and basic commodities, not leveraged credit default swaps), our government budget is in surplus, our trade relationships are healthy and inflation is under control.

But don't take my word for it. Listen to a man who runs a fund that has made a 57% GAIN in the past year. He called the current mess over a year ago. And he has profited from the mess, and he is telling you to get into Canada, financially. As for me, I agree, but then, I am here already. And I could only dream of a 57% gain over the past year...

Friday, October 24, 2008

Sunday, October 19, 2008

Thursday, October 16, 2008

Two great, disturbing quotes

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years."

"Great nations rise and fall. The people go from bondage to spiritual truth, from spiritual truth to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage."

(Authors unknown despite strong research efforts described here)

Saturday, October 11, 2008

Understanding the world through Pseudo-Sumo (rev 1)

I have the opportunity to speak to our staff in a week about the potential impact of the financial distress that dominates the news today. I am comfortable speaking to a big room full of people and being a bit theatrical, so my message won't simply be Death by Powerpoint. I want our staff to be able to think clearly for themselves, not to respond blindly to blandishments from others. In my message I think it will be useful to distinguish between the Economy, the Financial Markets, the Media and our own lives. I am working on an analogy that may help explain things, so please let me know with a comment whether or not the following is helpful.

"Lots of people in this room are concerned about what is going on in the economy and whether it will affect our jobs. In truth, we are in uncharted waters. No one can say for sure what will happen, or when. But our own levels of stress are reduced if we have clearer ways of thinking about what concerns us most. I hope this illustration helps you better understand what is going on.

"The Economy is not the same as the Financial Markets, and the Media is in turn different from each of them. Here is one way to view what is going on:

"The Economy is where people and companies buy and sell things. Farmers are still farming, oil wells are still pumping, kids still need running shoes and a ride to school.

"The Economy needs the Financial Markets, which are and always have been like a wrestling match between a giant named Opportunity and a giant named Risk. Opportunity is the good-looking one, the one with the swagger and the bulging muscles. Risk is the faster, sneakier one, who strikes when Opportunity gets too puffed up.

"But the match is a lot like Pseudo-Sumo, and money is the air in the sumo suits. Opportunity gets puffed up with air money, and by the middle of every round in the fight he gets to look really big. But later in the round Risk always comes in and steals the air from Opportunity, and that makes Risk look really big and Opportunity suddenly looks tiny. Six months ago, Opportunity looked huge; right now it is Risk's turn. The important thing to remember is that this fight is never decided, no matter how much it looks as if one or the other is winning. And the fight is in the Financial Markets, not the Economy.

"Commenting on the Financial Market fight are the wrestling announcers we call the Media. The Media are there to tell us what is going on, but we should remember that one of their objectives is to get us to tune in again tomorrow. So they like to get us excited and a bit fearful. They don't always care about the distinction between the Market and the Economy. They are entertainers at heart.

"And out here in the world is Us. We need to recognize the Economy is still real and active, although it is reverting to a normal level from being overheated. Recognize the recurring battle between Opportunity and Risk in the Financial Markets, and note that we don't know the length of each round. We need to recognize that the Media gives both news and entertainment, and not get too wound up by what is said. And at this point in the battle, where money is in short supply, we need to both take care of our own money and make doubly sure we give our customers full value for their money. Be diligent, prepare for uncertainty, think for yourself."

Comments, dear reader?

Monday, October 06, 2008

A tiny revelation

If you have been watching the US financial system gasping for breath lately, you can be forgiven for wondering why the US $ is as strong as it is. Many gold-bug type pundits are predicting the death of the dollar and the soaring of gold and yet the greenback is hanging in there quite well. Why is this? An article by Ambrose Evans-Pritchard sheds some light.

The dollar is high because so many dollar-denominated loans are being called, and borrowers need dollars to pay their called loans, dollars right now, in large quantities. "There is a wild scramble for dollars as a $10 trillion pyramid of global lending based on dollar balance sheets “de-levers” with a vengeance...International banks are facing margin calls on their dollar leverage."

For now, the dollar is in demand. Later, as all this new money supply works into the system, there will be inflation. Unless (as we read earlier) the central banks can't push things up over the edge into Inflation-Land and the whole mess rides the credit collapse backwards into deflation.

Note my fearless predictions last May that oil and gold stocks would do well. Hmmm, this has yet to happen, in fact a dollar worth of a decent gold stock 5 months ago would be worth half that today. Good thing this is a blog, not an investment advisory service... Having said that, I stand by my opinion that gold, not paper, will offer the greater monetary value in the years to come.

Sunday, October 05, 2008

There is no media bias on CNN

No, really.

Exodus 20:1-4, 7-9, 12-20

In the standard Christian lectionary, we find ourselves today at the Ten Commandments. Note the last couple of verses, where the people would prefer not to be quite so accountable, thank you very much.

20:1 Then God spoke all these words:

20:2 I am the LORD your God, who brought you out of the land of Egypt, out of the house of slavery;

20:3 you shall have no other gods before me.

20:4 You shall not make for yourself an idol, whether in the form of anything that is in heaven above, or that is on the earth beneath, or that is in the water under the earth.

20:7 You shall not make wrongful use of the name of the LORD your God, for the LORD will not acquit anyone who misuses his name.

20:8 Remember the sabbath day, and keep it holy.

20:9 Six days you shall labor and do all your work.

20:12 Honor your father and your mother, so that your days may be long in the land that the LORD your God is giving you.

20:13 You shall not murder.

20:14 You shall not commit adultery.

20:15 You shall not steal.

20:16 You shall not bear false witness against your neighbor.

20:17 You shall not covet your neighbor's house; you shall not covet your neighbor's wife, or male or female slave, or ox, or donkey, or anything that belongs to your neighbor.

20:18 When all the people witnessed the thunder and lightning, the sound of the trumpet, and the mountain smoking, they were afraid and trembled and stood at a distance,

20:19 and said to Moses, "You speak to us, and we will listen; but do not let God speak to us, or we will die."

20:20 Moses said to the people, "Do not be afraid; for God has come only to test you and to put the fear of him upon you so that you do not sin."