Their Economy Will Collapse, Including Ours (Tyler K.)
In the East, China has inflated a massive infrastructure bubble that its top-down, centrally-planned government has supported with unprecedented stimulus. That bubble is already starting to show signs of cracking. When it bursts, there will be little the People’s Bank of China, or any other central bank for that matter, can do to fight the tsunami.
Mark my words here: Real estate around the world will collapse like dominoes.
We’re 650,000 Start-Ups Shy of a Revolution (Abandon Ship)
But the need for these small businesses is even more basic in the places and neighborhoods with which I am most concerned. These communities have enormous unmet needs for everything from traditional banking to gas stations to quality food and even entertainment. The U.S. Department of Agriculture’s Economic Research Service estimated that 23.5 million people live in “food deserts” located more than one mile from a large grocery store.3 More than half of these people (13.5 million) are low income, and thus there is a great need to set up markets and grocery stores in many communities. Meeting that need is one of the ways in which the poor can help save capitalism while also helping themselves.
This is not to say that the US is at that point. But to say we are not yet at that point is like the drunk who says he has not crashed his car into a brick wall yet. It is to say that the idea that money can be created endlessly without engaging powerful forces of political and financial hazard is nonsense. It requires increasing amounts of official fraud, fear, and force to maintain, until the system ultimately collapses. I have seen this first hand, and have listed numerous examples of it on this site in prior posts.
n truth, this Barron’s article needs no time stamp. Every one of the arguments being made today were trotted out in almost identical form then. Front and center was the usual canard that the market is cheap on a forward PE basis. For what was surely the 17th time in as many years, Goldman’s Abby Joseph Cohen claimed the market was trading at well below its long term multiple…
Having provided his clarifying perspective on why the markets are extremely fragile and due for a 20-30% correction, Marc Faber was assaulted by CNBC’s Scott Wapner reading off a litany of recent calls that have not worked out as planned. His response was notable: “I started to work in 1970, and over that career, somehow, somewhere, I must have made some right calls; otherwise I wouldn’t be in business.” What CNBC then edited out of the transcript was Faber pointing out his 22% annualized return in his publicly-viewable funds since then and asking – sounding somewhat frustrated at the anchor’s mockery (and background snickers) – “I wonder what the CNBC portfolio would look like since 1999?”
Silver Prices – Megaphone Patterns (GE Christenson)
Silver prices have increased but in a disorderly manner. Rather than focus on details, examine the big picture–43 years of monthly price data in one chart–and divide that 43 year period into four “megaphone” shaped patterns on a log-scale chart.
Six Flags Stock to Rise Late This Summer (Tyler K.)
Six Flags’ earnings report last week was far from spectacular, with the company rehashing the old story about how winter weather soured early summer business.
That raises eyebrows among investors, because it seems blaming the weather is a catch-all for bad earnings reports for companies. I see weather used too often as an excuse for a bad quarter, but my job is to find the true weather-related impact on businesses.
Making Good Food Affordable (Eric G.)
On a per-pound basis meat and eggs tend to cost more than vegetables and fruit, especially high quality grass fed meats and pastured eggs, and this higher price per pound causes people to shy away from them. This is unfortunate since the price differential is negated by animal foods’ higher calorie density, so that costs per calorie for meat and eggs are usually equal to or lower than that of most fruits and vegetables. High quality animal foods will probably never beat a McDonalds hamburger, but organs like liver – which are far more nutritious than pricier cuts of steak and tenderloin anyway – come very close.
Gold & Silver
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