|+64% from Flash Crash|
|+176% from March 2009 Low|
|+64% from Flash Crash|
|+176% from March 2009 Low|
Keep Your Head Above Dollar
By: Peter Schiff
Friday, October 29, 2010
There has been so much discussion recently about "QE 2" that you would think the entire financial sector were about to embark on a transatlantic cruise. Unfortunately, they, and we, are not so lucky. In the year 2010, "QE 2" doesn’t refer to a sumptuous ocean liner, but a second, more extravagant round of "quantitative easing" – stimulus. In the past, this technique was simply called "printing money." As if the nation has not already suffered enough from the first round, Captain Ben Bernanke and the Fed are determined to compound the damage by hitting us with another monetary juggernaut. Their stated goal is to boost the economy and create jobs. However, since economic growth cannot be achieved by printing money, their QE 2 will sink just as surely as the Titanic.
"Credit Suisse says that by 2006, 49% of all mortgage originations in the United States were liars loans. The lowest incidents of fraud is 50% and that’s when the fraud fraudsters study it themselves. When independent folks study it, it’s in the 80 to 90% range."
"We've had an enormous of stimulus in the US, it's the biggest fiscal stimulus in the world, and huge unprecedented monetary stimulus. What's been stimulated? Not jobs in Michigan. What's been stimulated has been commodity markets and emerging markets. Because the liquidity just leaks out, and that's why another round of stimulus would not stimulate in the promised way." [link]*Michigan's unemployment rate is at 13% and the cotton future tripled since early 2009.
"HSBC told Block it could not provide funding for the RALs and refund anticipation checks because the IRS has decided to stop providing a debt indicator next tax season that would say whether a taxpayer has liens outstanding, and that would make the loans too risky to provide." [WebCPA.com]
"My impression is that much or all of the potential upside of quantitative easing is already fully reflected in stock, bond and commodities markets. Investors now rely not only on QE itself, but also on its success. This is a dangerous place to be." [read his full report at HussmanFunds.com (The Recklessness of Quantitative Easing)
|Click for Bloomberg Video on 10/19|
"In light of what I expect to be a disappointing economic impact from QE 2 -- I call it quantitative wheezing -- and the negative consequences of that strategy ("screwflation") on the majority of Americans, I now believe that equities are in the process of putting in the highs for the year." [read more]
"We are turning our banks into REITs; we're turning them into operators of real estate and I think Washington has to take a page out of the depression..."
"The other thing we have to really think about big picture is property taxes. Every time there's a foreclosure somebody stops paying their property taxes" (muni crisis)
"When you have foreclosures, what's the next thing that's going to happen? Not a Federal moratorium; not a voluntary moratorium by lenders who can't deal with their backlogs anyway; we're going to have State moratoria the way we did in the 1930s and the Governors of those states are going to say "folks stay in your homes, keep paying your property taxes, default on your mortgage", that's Washington's problem"
"A lot of mortgage backed securities (MBS) have a case where the trustee may or may not have a note. Lets assume he's actually got a completed note in his files. He still may not be able to foreclosure because he may not have clear title to the underlying collateral... There's an awful lot of investors out there who don't know what they own. They may have unsecured debt instead of a fully collateralized piece of paper. The litigation's going to go on for years, you have trustees, custodians..."
"Most securities issued in the U.S. are governed by New York law.. Under New York State law there are certain things that have to happen when you set up a trust to issue securities.. The dealer has to deliver to the trustee the notes that evidence the obligation.. So if the trustee doesn't have those notes and if the name of the trustee is not actually inserted in the document in some cases, the contract isn't live. A lot of investors may hold securities that are in fact uncollateralized, in other words the trustee may not have the capacity to go out and foreclose on a home to make those bonds money good."
“Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bite out of the backlog of distressed properties where the foreclosure process was delayed by foreclosure prevention efforts over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. “We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks.”
"The thing that makes Microsoft a great partner for us is that they really are the underdog here right and because of that they're in a structural position where they're incentivized to just go all out and innovate..."Watch the video after the jump.
"Writing in the October edition of The Gloom Boom & Doom report, Faber says the Fed will start printing money again and that would create a negative sentiment driving markets down. He doesn’t however see a threat to the March 2009 lows."So does the Bloomberg article trump this article? Maybe the fun begins in December after a correction. Tech Ticker interview?
"Essentially we have a very flammable condition and sparks could happen anywhere. I mean, just look at gold and look at the rest of the commodities. You can see silver and gold going up every day; gold at $1,350; we have this mortgage foreclosure issue that could be the next spark; there are earnings coming through strong but those are a lagging indicator; we still have European debt problems in the PIIGs, I do not think those have been solved...."
"Markets simply get tired and we've essentially retraced a Fibonacci level from the original decline. This market is acting a little bit tired; it took a long time to break through 11,000; maybe it goes a little more with some euphoria about Republicans winning back the house; however, this is short term."
"I still believe in precious metals mining companies....still like gold and silver even at these high levels.....and I sleep much better at night being generally short stocks rather than long stocks."
"Mounting cash flow stress on all lenders is reaching crisis levels. Non-payment by borrowers and mounting foreclosure backlogs are creating the conditions for the collapse of some of the largest U.S. banks in 2011." (Chris Whalen presentation at AEI. Slides also at Business Insider)
"Mr Hendry has purchased cheap credit protection on companies such as Nippon Steel or JFE Holdings for as little as 50 basis points annually, expecting that spreads will blow out following an export-led slowdown."Was this trade the next "John Paulson trade" he was talking about at that Russian Forum earlier this year?
"At a Shiller P/E of 21 and a historical peak-to-peak S&P 500 earnings growth rate of 6%, a simple reversion to the historical (non-bubble) Shiller norm of 14 would require seven years of earnings growth and yet zero growth in prices. Stocks are not cheap here."