Category Archives: Investing

Nothing Is Forever, Not Even Debt, by John Mauldin

All the so-called economic growth we’re getting is debt-funded. From John Mauldin at interest.co.nz:

John Mauldin sees an ugly conflict coming soon to the US as their official debt levels become unsustainable and they face a “Great Reset”. Will a better wealth and policy balance rise from the impending shambles?

Nothing is forever, not even debt.

Every borrower eventually either repays what they owe, or defaults. Lenders may or may not have remedies. But one way or another, the debt goes away.

One of Western civilization’s largest problems is we’ve convinced ourselves debt can be permanent. We don’t use that specific word, of course, but it’s what we do and is why government debt keeps rising. We borrow faster than we repay previous borrowing—and I mean governments everywhere, China as well as the US.

Our leaders have no real plan to reduce the debt, much less eliminate it. They just want to spend, spend, spend forevermore. And most citizens are okay with that. As I will note below, the Republican Party I grew up with, which back then seemed to constantly talk about deficits and debt, is now comfortable with 5% (and growing) of GDP deficits.

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Stay Strong, Go Long – Bulletproof Russia Becomes Contrarian Haven, by Tom Luongo

Vladimir Putin has overcome many obstacles and turned Russia around. The country presents some interesting investment opportunities. From Tom Luongo at tomluongo.com:

It’s a tough road being a contrarian on Russia. This is especially true today when the entirety of the U.S. and European political system is aligned to demonize Russia at nearly every level.

And the main reason for this is that Russia under President Vladimir Putin refuses to do the West’s bidding both at home and abroad. The central tenet of U.S. foreign policy is that U.S. concerns, no matter where they are, are supreme and everyone else’s are subordinate.

Russia under Putin doesn’t play that game. He hasn’t for nearly twenty years now. This is not to say, of course, that objectively speaking Putin is a good man or even a good leader. In studying Putin for the past seven years I’ve come to one inescapable conclusion.

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Why Gold Stocks Are an “Asymmetric Bet”, by Doug Casey

Doug Casey makes the case for speculating in gold stocks. From Casey at caseyresearch.org:

My regular readers know why I believe the gold price is poised to move from its current level of around $1,460 per ounce to $2,000… $3,000, and beyond.

Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.

In a desperate attempt to stave off a day of financial reckoning during the 2008 financial crisis, global central banks began printing trillions of new currency units. The printing continues to this day. And it’s not just the Federal Reserve that’s doing it: it’s just the leader of the pack. The U.S., Japan, Europe, China… all major central banks are participating in the biggest increase in global monetary units in history.

These reckless policies have produced not just billions, but trillions, in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will in many ways dwarf the Great Depression of 1929–1946. Paper currencies will fall apart, as they have many times throughout history.

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China’s Skyscraper Boom Comes Crashing Down Amid Developer Default, by Tyler Durden

The world’s tallest buildings are often built towards the end of long bull-market runs. From Tyler Durden at zerohedge.com:

Investors typically concentrate on GDP growth, leading indicators, and other forms of macro data to determine a turning point in the economy, and or to determine when the window of vulnerability opens up that could shock the economy into the next recession.

For years, we’ve cited some fascinating alternative forms of data, such as the Skyscraper Index, which was first elaborated by Andrew Lawrence in January 1999. The index is simple; the world’s tallest buildings are often constructed or completed at economic turning points, right before or just as the downturn gets underway.

The Burj Khalifa in Dubai, which is the world’s tallest building, was completed in 2008. Shortly after, the global financial system crashed.

The Greatest Swindle in American History… And How They’ll Try It Again Soon, by Jeff Thomas

Governments are broke, and they’re only going to get more and more rapacious. From Jeff Thomas at internationalman.com:

International Man: Before 1913 there was no income tax, and the United States was a much freer country. Initially, the government sold the federal income tax to the American people as something only the rich would have to pay.

Jeff Thomas: Yes, exactly. It always begins this way. The average person is always happy to see the rich taken down a peg, so this makes the introduction of the concept of theft by the government more palatable. Once people have gotten used to the concept and accept it as being perfectly reasonable, then it’s time to begin to drop the bar as to who “the rich” are. Ultimately, the middle class are always the real target.

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Negative Interest Rates and You, by Mark Nestmann

Negative interest rates are playing havoc with people’s retirement planning. From Mark Nestmann at nestmann.com:

At the end of this past August, an astonishing $17 trillion in global debt had negative yields. About 30% of investment-grade bonds had yields below zero. If you bought these bonds and held them to maturity you were guaranteed to lose money.

Since then, the glut of bonds with negative yields has gone down by about $5 trillion. And that’s led to serious pain to anyone who bought them.

Interest rates throughout the world have been falling almost continuously since the 1980s. The first country to impose negative interest rates on a consistent basis was Sweden, which introduced a -0.25% rate on its “deposit interest rate” in 2009. The much larger European Central Bank (ECB), which sets monetary policy throughout the 19-country eurozone, followed suit in 2014 when it imposed a negative rate of -0.1%.

Negative interest rates were meant to be a temporary emergency measure to prop up moribund European economies. But they’re also a great way for cash-strapped governments to pay the bills.

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A blue dot barely visible from New Silk Roads, by Pepe Escobar

The US’s Johnny-come-lately effort in Eurasia won’t put a dent in the Belt and Road Initiative. From Pepe Escobar at thesaker.is:

US-Australia-Japan alternative to Belt and Road helps explain why the US sent a junior delegation to Thailand and why India opted out of RCEP

China’s President Xi Jinping waves during the opening ceremony of the China International Import Expo in Shanghai on November 5. Photo: AFP/Hector Retamal

Chinese President Xi Jinping six years ago launched New Silk Roads, now better known as the Belt and Road Initiative, the largest, most ambitious, pan-Eurasian infrastructure project of the 21st century.

Under the Trump administration, Belt and Road has been utterly demonized 24/7: a toxic cocktail of fear and doubt, with Beijing blamed for everything from plunging poor nations into a “debt trap” to evil designs of world domination.

Now finally comes what might be described as the institutional American response to Belt and Road: the Blue Dot Network.

Blue Dot is described, officially, as promoting global, multi-stakeholder “sustainable infrastructure development in the Indo-Pacific region and around the world.”

It is a joint project of the US Overseas Private Investment Corporation, in partnership with Australia’s Department of Foreign Affairs and Trade and the Japan Bank for International Cooperation.

Now compare it with what just happened this same week at the inauguration of the China International Import Expo in Shanghai.

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