| MARKET ROUNDUP | |
| Dow | -51.28 to 17,801.20 |
| S&P 500 | -0.49 to 2,059.82 |
| Nasdaq | +25.78 to 4,766.47 |
| 10-YR Yield | -0.037 to 2.22% |
| Gold | +$35.20 Â to $1,230.10 |
| Crude Oil | +$0.66 to $63.71 |
“Carry Trades” are dominating market action. Not just here. Not just in stocks. In virtually every asset class around the world.
But now, some troubling tremors are starting to emerge – and that could change the game!
So let’s address your first question right up front: What the heck is a carry trade?
Think of it like banking. A bank’s goal is to raise money cheaply from depositors like us, then take that money and loan it out at a higher yield to someone else. Paying out 1 percent on a CD, and loaning it out at 5 percent to a small business is basically a way for the bank to earn “positive carry” of 4 percent.
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| China’s markets were hit hard, and other markets sold off in sympathy. |
Things are more complicated in the global markets. It’s not just banks with a seat at the table, and it’s not just CDs or business loans. It’s investors of all sizes – all trying to borrow cheap money from a wide variety of sources, and investing that money in a wide variety of higher-yielding assets.
The strategies involved can be incredibly complex. But lately, some of the biggest carry trades have been those taking advantage of cheap yen and cheap euros. That’s because the Bank of Japan and European Central Bank have been doling out free money like Halloween candy.
So as part of this common carry trade, global investors will …
   1. Borrow cheap yen and euros (and to a lesser extent, borrow in many other currencies) …
    2. Sell those currencies and convert their funds into dollars …
    3. Then buy dollar-based assets that yield more, largely because the U.S. Federal Reserve has been talking tougher than its overseas counterparts.
That process has helped drive U.S. stock prices higher and higher in recent weeks. There has also been a negative side effect on commodities. Commodities often trade as “contra-dollar assets” – meaning they fall in value when the dollar rises. With the dollar surging, it’s been a bloodbath in gold, silver, copper, crude oil and other resources markets.
So what’s the problem? Can’t we all just sit back, buy U.S. stocks, short the yen and euro, dump energy and gold, and retire as millionaires?
Maybe for a while. But eventually, the rubber band gets stretched too far. Everyone and his sister will put the same trades on, and you get to the point where assets are ridiculously mispriced. When that happens, even the smallest bit of contrary news can lead to furious counter-trend rallies.
| “The Bank of Japan and European Central Bank have been doling out free money like Halloween candy.” |
I’ve seen it happen before many times in my career, and my antennae have been up recently, especially in the currency markets. As much as I think Japan and Europe have major problems, and the U.S. is in better economic shape, the yen and euro have gotten wildly oversold and the dollar has gotten severely overbought.
That means you have the preconditions for a sharp adjustment in place. Then overnight, China’s Shanghai Composite Index reversed sharply and dumped more than 5 percent on record-high trading volume of $128 billion. That was the worst one-day market rout in a half decade for a market that had been rising and rising despite weak, underlying economic fundamentals.
Other frontier and far-flung emerging markets sold off in sympathy, and the Japanese yen launched a sharp rally. As a matter of fact, the yen earlier staged the biggest rally since the spring. Gold and silver have also been seeing a “stealth” rally, and so have agricultural commodities.
Maybe this is a short-term thing. Maybe it’s just a small correction, and nothing more. But it’s worth watching whether this turns into something bigger. Because carry trades are great … until the moves get so large that the markets can’t carry their own weight anymore!
So let me know your thoughts. Have you heard of carry trades before, and does the potential reversal of those trades worry you? What do you think about the yen, the euro, and the dollar? Have we gone too far too fast, leaving us open to a big correction? Or do you think those moves have further to go? Finally, do stock market sectors like energy and gold look attractive to you after the beating they’ve taken in the past several months?
You know the drill: Hit up the Money and Markets website add your comments, and get the conversation going!
| Our Readers Speak |
Boy did my column on the problems at McDonald’s (MCD, Weiss Ratings: C+) strike a nerve! It seems like many of you think the real issue is the quality and healthfulness (or lack thereof!) of the food, plain and simple.
Reader Chloe shared this succinct observation: “I lost the best friend I ever had (a double cheeseburger) when they started using pink slime ‘meat.’ I can’t get past that. And the prices aren’t comparable, either.”
Reader Marne expanded on that theme, saying: “McDonald’s has historically been a very successful company, but will need to reinvent if it is to survive. The reason is that there is increased awareness of the negative effect that refined, processed foods and animal products have on health.
“The Baby Boomers are discovering this, and getting educated on changes in diet that can prevent disease and improve health and longevity. Very influential group, those Boomers – huge numbers, and very willing to spread the word.”
Reader Dave R. piled on as well, saying: “It’s primarily their food. Yeah it’s 100% real beef, BUT it’s pink slime, chicken slime. It’s just junk. McD’s is more interested in PROFIT than quality of product.”
Finally, Reader Holly added the following: “I can really agree with this article. I have two teenage daughters and one teenage son. McDonald’s used to be a ‘Road Trip’ favorite. Not anymore! The kids want to stop at places like Chipotle Mexican Grill (CMG, Weiss Ratings: B).
“‘Yuck’ is often associated with McDonald’s and other fast foods … Their decisions are so much better than mine used to be. I am glad that fast food is losing its grip on our young sailors!”
Well, there you have it folks. Some pretty damning condemnation of the things McDonald’s is doing and the food it’s selling. If you want to weigh in, definitely use the website to share your thoughts – on fast food, healthy eating, or anything else I’ve discussed here!
| Other Developments of the Day |
Over the past few years, the Fed has basically outsourced its communications operation to Jon Hilsenrath at the Wall Street Journal. Whenever it wants to signal a policy change in order to keep Wall Street from freaking out, it appears to “plant” a story in the Journal, using him as the conduit.
Sure enough: Just a few days before the next policy meeting on December 16 and 17, the Journal is reporting on the front page of its website that “Federal Reserve officials are seriously considering an important shift in tone at their policy meeting next week: dropping an assurance that short-term interest rates will stay near zero for a ‘considerable time’ as they look more confidently toward rate increases around the middle of next year.”
*Talk of canceled, multi-billion-dollar energy projects. A five-year-low for crude oil prices. Surging yields and falling prices for energy sector bonds, leading to talk of rising defaults.
The pessimism is so thick, you can cut it with a knife. Which may be exactly why you want to start buying. Just a thought. What say you?
Funny thing is, my household is in the process of switching over from separate AT&T and Verizon plans to a Sprint (S, Weiss Ratings: D+) family plan because Sprint’s deals are just too juicy to pass up. We anticipate saving anywhere from $100 to $150 PER MONTH for making the move … even after factoring in the iPhone 6 upgrades we’ll get as part of the package.
It’s worth noting that I’ve been with AT&T for several years. My wife has been with Verizon for ages, too. But they simply wouldn’t or couldn’t match the competition, and my wife and I can put that money to much better use elsewhere. So tough luck T and VZ – you lost customers who have paid you thousands of dollars over the years!
If you have any comments on these news stories, or others you’ve stumbled across, hop on over to the website to weigh in. I read as many of the remarks as I can, and I know your fellow investors appreciate them.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 49 comments }
Does Gold or Oil lok attractive now?
The world RUNS on OIL…not so much on Gold…there’s the answer!
WOW!! Santa’s filling my wish/want list early this year. Sold 12/20/2014 puts on SSL, BP, FCX, and IBM at fire-sale prices. Hope they all fill. Added to positions in AMLP, VZ, and IOC. Merry Xmas to me.
Gold is going to the moon, no way to stop i damage is done
Hi I was a farmer in the 80’s. (NZ) Became increasing concerned with the use of Antibiotics,
& other enhancing chemicals, in beef cattle.Since then the situation has become much more serious. I no longer eat processed meats. Ensure that I buy grass feed beef.
Grow my own vegetables. Eat virtually no processed food. Food producers, like the
Major drug companies have become criminal in terms of marketing, false advertising, etc, etc. Dont start me on Monsanto..!!! In a word…EVIL.!!!
Cheers
I have retired from motor coach driving. I would try to call ahead to let the restaurant know when I was bringing in a large tour group so they could keep staff on hand to efficiently handle our orders. It was embarrassing to park in McDonald’s lot, open the door & watch students cross the street to Panara Bread, Subway, or Wendy’s. Whether they were soccer teams or snowboarders they knew they wanted quality & were willing to pay to get it.
Mike,
Isn’t the short term rate on dollars also low? Is there a “carry”, or leverage, or margin, whatever it might be called in dollars, too? Even if the those dollars are also invested in US assets. If the Fed does verbally tighten by removing the “considerable time” language, shouldn’t we expect that some investors will begin to unwind their borrowed dollar investments. At the same time, shouldn’t an increased expectation of higher US rates increase activity in the Yen and Euro carries? Timely answers to these questions is the type of information for which I would pay a subscription price. Thank you, Joe.
My family quit eating at McDonald’s over a decade ago when we observed my fathers’ dog begging for some of his hamburger. After picking out a piece of the hamburger and offering it to the dog, the dog smelled the meat and then turned up its nose and walked away without even taking a bite,, To us, if a dog can’t distinguish the food as edible meat, then it’s no good for me either. Subsequently, I have read several articles about McDonald’s hamburgers and french fires that won’t mold/rot (in comparison to the same fresh counterparts) when left out for MONTHS!!! And don’t get me started on what/how they clean their equipment daily !!! (as related by ex-employees) Like has been stated, as consumers we are enlightened and are making better/healthier choices. Mickey D’s needs to start changing their menu or accept the continued loos in revenue.
Euro is way oversold and should rally soon. That means dollar should turn down.
You should re-address the XLE. Looks like it is headed for lower ground already.
Cheap money from the fed has been the driver for this market. The boom is built on the sands of bank notes and deposits and will soon collapse.
Watch Elizabeth Warren, Senator from Massachusetts…. She seems to be one of a small number of Senators and Representatives who haven’t sold their collective souls to the Cabal of Banking, Brokerage and Insurance… She wants to bring the Glass-Steagall Act back to law and bring closer scrutiny to the operations of the above Cabal…. We need more like her!
Mike,
You will find that you get what you pay for. Here in Southern California with its mountainous terrain Sprint has become a dirty word. Yes its service is cheaper, but so is its quality of service. Maybe in Florida which is flat swampland cell tower placement is not an issue, but here is SoCal and in the Western States cell towers, or the lack thereof, is a very big issue.
Verizon in California has been the leader in service for the past 15 years and provides cell phone service and bandwidth where no one else does. I know it is a bit pricey, but the service will be there when I need it, and for a real property appraiser, that is a crucial consideration.
Merry Christ-mas from A`Cuara Appraisal
Stock Markets can go up without legitimate reason (fiat money = wallpaper), so more wallpaper = rising Stock Market, thus not relevant.
Real economic expansion of domestic product sales (GDP?) is REALITY, not the carry trade etc.
Selling Cars with nothing down, no interest rates and money back = says depression.
With World Tremors,. standing on wet sand, is not smart.
Well stated! its a cycle being repeated because nobody has learned god damn lesson
I have taken a bath on fertilizer stocks, RNF,TNH, UAN. I thought they would go up with cheaper natural gas as it is the basic raw material from which they are made. I am down about $50,000, but inclined to hold. Does any one out there have a crystal ball on these stocks.
1. S may save you $, and is OK as long as you don’t make phone calls. But if you want to talk on the phone reliably, better pay up for VZ.
2. Oil pricing and energy stocks are two different things, of which the latter are more varied and complex. With respect to oil itself, I don’t think a market price has been reached yet. I think it will fall to $60, maybe $50, before the end of Q1 of 2015, after which it may move up again. To take advantage of this move, a suggestion would be to own SCO, which I do.
A very interesting article. I had never heard of “Carry Trades”.
You get what you pay for.\Weiss is like the Sprint of financial etters.
The central banks, when they feel they must print money, that money must not be given
to the BIG BANKS to gamble it on anything that grabs their fancy and profit by distorting
the asset values and markets creating a new time bomb.
In my way of thinking that money must be lent at the most favourable terms and very low
interest rates to decent companies that produce, trade and construct real goods.
Best Wishes
George Kay
Stocks; That balloon is getting big like it did a few years a go. Every balloon has a capicity limit and poof, all gone!! Precious metals, especially gold has been a means of trade since the earliest mankind. It’s value has and always will fluxuate; But, it was still in this century when gold value was like $14.00 per ounce. So in around a hundred years gold has increased in value close to $2000.00 per ounce. The stock market goes uo, precious metals values go down. But, a hundred years later without going to a calculator gold has increased in value 850 0/0. The stock market is about ready to take a big hit; Gold will be in the $3000.00 per ounce in two years or less. Silver will be a great band wagon to be on also. Hey, don’t count energy out. The real world needs precious metals and energy for survival. I am not a doomsdayer; No one has ever gotten their plow cleaned if they had gold in reserve. Semper FI. GOD BLESS AMERICA
Never knew what “carry trade” meant. Thanks for explaining. I believe “fiat” tanks, like gold,silver and miners. Meanwhile I’m Guessing Market corrects 30-50% and oil climbs back.
Is there not something called a multiplier effect which allows banks, when working in unison, to multiply 10 times, the money deposited with them, not just the difference between interest on loans minus interest on deposits? Is there not then potential to charge interest on the tenfold created out of nothing?
Spent 25 yrs in a long haul truck and found Burger King much more to my liking than McD. But I agree even the best fast food is not good. Lost 50lb in first year after retirement without trying.
Regarding phones, been with ATT since cell phone invented but now we live in a motorhome and use the Thousand Trails system. Finding that Verizon provides more reliable service where their parks are located out away from urban areas.
After reading Marne’s comments below… I beg to ask, why are Americans the most over weight folks that has ever lived in this country….? Don’t mess with my Big Mac….don’t you dare….
Reader Marne expanded on that theme, saying: “McDonald’s has historically been a very successful company, but will need to reinvent if it is to survive. The reason is that there is increased awareness of the negative effect that refined, processed foods and animal products have on health.
“The Baby Boomers are discovering this, and getting educated on changes in diet that can prevent disease and improve health and longevity. Very influential group, those Boomers – huge numbers, and very willing to spread the word.â€
MickeyD, like so many things has been in a bubble. It went higher in its field than anyone ever thought it would, now it has turned down, and will probably fall further in its field than anyone thinks. If it survives, it will likely turn up again someday, but it will need a complete revamping to do so.
All the health woes across the land – Diabetes – Neurological Disease – and of course the Epidemic killing everyone – Cancer. Man reason is our food sources – Animals force fed chemical laden food – injected with all kinds of poisons and now factor in the GMO poison foods (ThankYou – Monsanto ) – Who finance their bogus “GMO’s are safe” studies performed by bought and paid for Universities and independents. Why has most of Europe said hell no to GMO’S ? and China – Russia they all understand – if you nuke a vegetable or fruit repeatedly with poisonous chemicals , the person eating the poison food source will suffer poor health .
GMO foods kill off all the beneficial bacteria in ones guts & guess what sends them killer White TCells – yes your beneficial bacteria. Well if the bacteria are all dead or dying from the host consuming poisonous Frankenfoods your health declines. Read the obits in your local newspapers 75% will reference – Hospice – Fought the fight – Surrounded by Family – Etc. Cancer is undeniably an epidemic.
Where do all the FDA bigwigs go – To higher paying jobs at Monsanto. Monsanto writes their own legislation that is then rubber stamped by our bought and paid fors in DC.
Insist That all foods be labeled GMO – or Non-GMO – or better yet grow your own just make sure you don’t use genetically altered seeds. Go organic for 3 weeks and see what happens
Mostly so! The FDA has become a bad joke, and not a funny one, either. It has become a stepping stone to high positions at Monsanto or the big patent medicine companies.
Gold is in a very interesting place. Larry thinks it could fall to around $700, but it has been showing surprising strength at near $1200. If it breaks that area, Larry is probably about correct. Today, it rose to challenge some of the short term downtrends, breaking one or two. If it continues higher, it may break out, but I want to see more than that, and could still make some money after a pullback to confirm. Question: Has gold simply become a commodity, like copper or iron, or does it still have some of the old glamor?
Watch the N. Roubini interview on the YAHOO web site. He believes a bubble will form in the US stock market, but gives it about two more years to go before it pops.
IMHO we need to wait and see how the dynamics of cheap energy play out in 2015. It’s possible we could be in for a repeat of the 90’s when OPEC lost control over the price of oil. We could be in the middle of the business cycle for a very long time. We can all only hope so.
wow lots of stuff going on. Well we’re sticking to the plan big time diversification minerals and some drips funds. stashing cash and conserving resources at this point. Future is not quite clear enough in order to relax my position. Looking for mega volatility in all markets throughout the Global Spectrum.
i would like to see what larry edelson has to say about all this.
What some of us don’t get is: “why doesn’t McDonalds – one of the principal owners of CMG – take some of their concepts and management, and reinvent McDonalds. It’s a no- brainer.”
Weapons of metabolic syndrome is how I view McDonalds. If aliens tried to come up with the most unhealthy meal combo possible to reduce the human population and take over Earth they would be hard pressed to beat Mickey D’s processed plastic buns, omega-6 oxidized vegetable oil deep-fried starch fingers and antibiotic-hormone laden franken meat in combination with high-fructose, cancer-feeding, processed sugary sodas and desserts. The dollar menu promotes self-induced poisoning of the working class who can’t afford or appreciate the nutritional value of fresh organic vegetables, grass-fed meat and raw dairy.
Mission accomplished Ronald, you’ve addicted our children to eating synthetic garbage. I will short your stock into oblivion so you leave this planet and never return!
I am right with David of Vancouver. If you would like to succumb to cancer, alzheimers, parkinsons, stroke, diabetes, or heart disease, then make regular visits to McDonald’s an eat up. As David said, its all there, trans-fatty acids are in everything, massive corn syrup and sugar. Sugar is the world’s best cancer inducer. African tribes don’t have sugar, they don’t get cancer at a rate of one in three. Then there’s the white flour, second in line to sugar for giving us cancer and alzheimers . It has been screened, sifted, bleached with bromine, laced with additives and then baked.
stock market. the US dollar in on a spiral upward. Soon it will descend. The US dollar is being marginalised by China and at least 7 other friends as they see the US dollar has no future. It will wane, crack, shudder for a bit, then crumble to the ground, like a 20 storey building being struck by a huge bomb. Then gold and silver will shine. Gold will climb to $5,000 an ounce by 2017. I have some gold hidden for that day. When the US stock market finally gives way, about Sept or Oct next year; it will be similar to that of 1929!.
I will be out of it well before then
The food sucks at Mcd & Taco Bell & Wendy’s AND an added insult they staff with illegals which one cannot communicate with. These fast food quick killing factories are a schizophrenic example of the finest capitalistic corporate-government collusion can inflict on the masses…the cheapest quality food at the prices designed to make the highest profits…health & consequences be dammed. Who said … If you control the nation’s food supply you control the people? Look there & it will all make sense…what has been done to America’s food is criminal and reflected in the ill health of its population…as exemplified by that 15 pound baby born a few days ago!
The food sucks at Mcd & Taco Bell & Wendy’s AND an added insult they staff with illegals which one cannot communicate with. These fast food quick killing factories are a schizophrenic example of the finest capitalistic corporate-government collusion can inflict on the masses…the cheapest quality food at the prices designed to make the highest profits…health & consequences be dammed. Who said … If you control the nation’s food supply you control the people? Look there & it will all make sense…what has been done to America’s food is criminal and reflected in the ill health of its population…as exemplified by that 15 pound baby born a few days ago!
The food sucks at Mcd & Taco Bell & Wendy’s AND an added insult they staff with illegals which one cannot communicate with. These fast food quick killing factories are a schizophrenic example of the finest capitalistic corporate-government collusion can inflict on the masses…the cheapest quality food at the prices designed to make the highest profits…health & consequences be dammed. Who said … If you control the nation’s food supply you control the people? Look there & it will all make sense…what has been done to America’s food is criminal and reflected in the ill health of its population…as exemplified by that 15 pound baby born a few days ago!
The food sucks at Mcd & Taco Bell & Wendy’s AND an added insult they staff with illegals which one cannot communicate with. These fast food quick killing factories are a schizophrenic example of the finest capitalistic corporate-government collusion can inflict on the masses…the cheapest quality food at the prices designed to make the highest profits…health & consequences be dammed. Who said … If you control the nation’s food supply you control the people? Look there & it will all make sense…what has been done to America’s food is criminal and reflected in the ill health of its population…as exemplified by that 15 pound baby born a few days ago!
The food sucks at Mcd & Taco Bell & Wendy’s AND an added insult they staff with illegals which one cannot communicate with. These fast food quick killing factories are a schizophrenic example of the finest capitalistic corporate-government collusion can inflict on the masses…the cheapest quality food at the prices designed to make the highest profits…health & consequences be dammed. Who said … If you control the nation’s food supply you control the people? Look there & it will all make sense…what has been done to America’s food is criminal and reflected in the ill health of its population…as exemplified by that 15 pound baby born a few days ago!
Carry Trades
“Carry Trades†Spain-Gibraltar-1960-63
In the USAF, I was stationed at a Spanish air force base, in southern Spain, from 1960 to 63. We accidentally discovered a trick that we never completely understood but did as often as we got the chance. It was a long time ago so I may have the order of events a little confused but it was something like this. We got paid in US dollars and changed them into Spanish pesetas. We messed around on our way down to Gibraltar where we changed the pesetas into British pounds. We messed around there awhile (got drunk) and then did some more of that along the Spanish coast where we changed our pounds back to pesetas. If we had any money left by the time we got back to our base, we changed it back to dollars. One of the math smart guys among us figured out that, Somehow, we got more dollars back for our pesetas than we had when we first exchanged them………or something like that. Confusing, but we made a little profit. I’ve always wondered how this worked. I’m often in Europe (live in Texas) and the world is upside down now. Europe was cheap (a bargain) for us in the 60s but now my European friends like to visit me in the States because, by comparison to then, we’re the bargain now. It’s mostly Euros there now but not everywhere e.g. UK, Poland, Switzerland etc. I’ll be in Poland this spring and stay with friends in Geneva before returning here. I’m also occasionally in Japan (yen down right now) If I understood the process (so long ago), I’d like to try it again now just to see what would happen. Can anyone explain, or have any ideas about it?
Changed to Sprint eh? $100+ savings a month will look pretty crumby as you lose multi $ when Sprint service fails. I tried Sprint for my smart phone and got so frustrated by on and off service that I almost threw it into the Gulf of Mexico. I switched to AT&T for the phone and have a Verizon bundle at home.
Good luck with your switch!
It’s not just the food, I avoid McDonalds because of their company politics.
I am 80yrs and have eaten at MACD twice…late 50’s when they were only .15 cents and again in 1997…NEVER AGAIN! Had I continued to eat at MACD I probably would never have made it to 80trs.
The problem is that they have been moving away from the basics that
made them great for years. They are trying to be politically correct
and be all things to all people with vegetable cooking oil, salads,
etc. Ray Kroc wouldn’t recongnize the taste of the food today.
Serving times seem to have gone out the window. As a customer, you
will only wait in a slow line once or twice and then go elsewhere.
McDonald’s was once a fast service restaurant. It then became a quick
service restaurant. I’m not sure what it is today.
It will take a massive effort in both food quality and speed of
service for them to regain the market share that they have been losing
for years.
I am a former McDonald’s franchisee.
I am surprised at how ignorant people are today about Food. The so called “Pink slime” labeled by the media was nothing more than the Beef packers taking the trim and spinning out some of the fat so that it could be mixed back in and make lower fat ground beef. If you have eaten low fat ground beef any time in the last 5 years prior to over a year ago, you ate this all natural beef product. Not just from McDonalds, but from every hamburger joint and resturant around. Since this stupid media driven episode, everyone is now paying 25-30% more for their ground meat. Sometimes it makes a little sense to be informed instead of checking your brain at the door and letting your emotions take over. By the way, the media represented this as something illegal. However, it was all approved by the USDA as an acceptable practice. Think about that the next time you by dinner off of some street vendor in Mexico City or Bangkok.
You go ahead and eat the chemical slop called “pink slime” and have some GMO veggies to go with it . You’re the one who has to pull your head out of your arse and who in the hell eats rat meat from food venders in Mexico or Bangkok
Mike I think your description is perfect. Japan and Europe’s economies are both huge deflations due to over investment and demographics that won’t tolerate it. Why did business not add to capacity during these years of free money?? Certainly debt/capacity was too large in 2000 and obviously it was too high in 2008 (even higher and more foolish). And now debt/capacity is just that much more foolish with individual debt drastically too high and now we have thrown into the mix outrageous sovereign debt. All trying to save an over capacity world in declining demographic scene.
I don’t see gold or oil as doing well ahead because the world is in the throws of world deflation. What countries should do is face this demographics and debt situation head on and manage the slower GDPs and world overcapacity. It seems that China’s slowing leaves no room for doubt about capacity and no excuse for belief in outrageous new growth emerging economies.
Read “The Death of Money” particularly the unique properties of extremely complex systems with an infinite number of feedback loops
p. 269 “Another formal property of complex systems is that the size of the worst event that can happen is an EXPONENTIAL FUNCTION of the system scale…” [yelling added[ and
and p. 270 “complex systems can also go from subcritical to critical spontaneously…One day the stock market behaves well,and THE NEXT DAY it unexpectedly collapses [yelling added]…”
Read the whole book and then tell the rest of what the hell to do… ??
I await your wisdom which has GOT to be better than mine !
A friend of a friend, who is in the meat packing business, said to NEVER buy Mickey D’s, because they are the only company that has the fast distribution necessary to buy the OLDEST meat and still get it out to the customer in time to meet the expiration date.
YUCK!!!!! From a guy IN THE BUSINESS. and nothing to gain from telling us this.
Go to a store that sells home-use meat grinders (Sears, Target, etc.). Then buy boneless
beef roasts (preferably not shoulder, but top or bottom round), and go home and grind it yourself. You will love me for it! I started working for a national meat packer in 1949; I have seen a lot.