lisez , vous serez étonné ++
on commence par son bilan :
From a Café member in England:
Interesting facts (need to be verified)
Greenspan started Apr-87 or so ?
Since then US M3 money has gone from 3.5 trillion to 9.5 trillion
US 'official' govt debt from 2.3 Trillion to 7.7 trillion
DJ from 2,500 to 10,000 approx
Gold from c.450 USD per oz to c.430 today !!
Silver from 8-9 USD per oz (quite volatile 18 years ago) to c.7.2 today
Platinum c.600 USD per oz to c.860
Oil is up considerably too
And derivatives !!!!!
The next guy will have quite a job
portrait par Teddy Butler Henderson, un renomé homme d'affaire londonien
Yesterday, I had a wonderful conversation with internationally renowned
and London based, Teddy Butler Henderson. "Teddy", one of England's respected elder statesmen, has a very highly regarded investment service and is very well plugged in with the investment community in Europe.
You will get a kick out of this story. I sure did. "Teddy" had lunch in London with Alan Greenspan in 1971. Greenspan had his own consulting firm at the time. Both "Teddy" and Greenspan" were believers in the Kondratieff wave (cycle) theory. Greenspan told Henderson that his ambition was to become the top man at the Federal Reserve.
Knowing the Kondratieff cycle would be predicting a crash or depression of sorts about the time he would become head of the Federal Reserve, Greenspan told Henderson he could stave it off by various means (injecting money into the system, supporting the dollar, etc) and he intended to do just that if his career ambition came true. And you wonder if the gold market has been controlled!!!!!
Teddy (TBH) has been a believer that the dollar is in deep doo doo and, that while it has been weak recently, it has more downside to go - about 5% more against the Euro. Guess who wants it that way? Contrary to what you might think, it is Alan Greenspan, according to TBH. Teddy says that Greenspan knows that he had to take certain steps to keep the bubble going (a la the conversation he had with him 28 years ago).
Greenspan knows that our trade deficit is a problem and that our manufacturing sector and real world export sector of our economy needed help. Thus, he made the decision some time ago to work on getting the dollar down. To keep our bubble going, he needed to have this sector of our economy become more competitive. Solution - lower dollar.
Now, this does not make the euro crowd very happy according to TBH. Their reserves are in dollars and with the new start in EMU, they do not want economic problems for themselves. Today, for example, there were reports of a French, German clash over farm policies. A lower dollar can only exacerbate that clash.
At the same time, the EMU wants a strong euro in general. But they want it that way because of a strong economy, not a weak one. In that light, TBH feels that they will up the gold backing of the euro as a reserve at some point in the future. Interestingly, we reported talk of this to you some time ago and today's ECB comments are very encouraging. Teddy feels that the ECB will break ranks from Greenspan in his efforts to keep the price of gold down, referring to Greenspan's comment last July to a congressional committee, " Nor can private counter parties restrict supplies of gold, another commodity whose derivatives are often traded over the counter where central banks stand ready to lease gold in increasing quantities should the price rise". It is this breaking of the ranks that will spur the price of gold to much higher levels according to TBH.
TBH has been a big fan of the US stock market and has his followers heavily invested here (while hedging the currency risk). His reasoning is the strong U.S. economy and he knew what Greenspan was up to. He invested in the US equity market with conviction ( and with the help of his 28 year old information ) knowing that Greenspan would lower interest rates sharply in a pinch. For the future, he sees inflation in the US as workers demand much greater compensation for their efforts, especially as they see this incredible stock market rally. TBH thinks Greenspan will be very slow to hike interest rates in response to this inflationary threat, citing previous false alarms of inflation.
However, that growing U.S. inflation is the other reason TBH is bullish on gold. His long term U.S. equity outlook is not a rosy one, however. TBH sees the Greenspan induced bubble blowing up by August. Sometime before then, he plans to advise his clients to bid sayonara to Uncle Sam and our stock market.
et enfin ce qu'en dit R.Russel
President Bush wants an "Ownership Society." Well, I've got news for him -- we already have an ownership society. Americans borrow and the banks own them. Today everybody (except a small segment of the very rich) is in debt. I've heard it said that the typical American family couldn't raise three thousand in cash if their life depended on it. Sounds about right to me.
So let's call it what it is. We live in the debt-society, and our current "prosperity" is based on debt, debt and more debt. Is it a plot? Is it some kind of diabolic "foreign" scheme? Not at all. It's part of the law of unintended consequences. You see, following the bull market top of 2000, instead of allowing the US economy to correct, the Greenspan Fed decided to fight the bear "tooth and nail" (doesn't that sound familiar to veteran subscribers?). It was a case of "Inflate or Die."
How do you fight deflation and a potential economic collapse? You do it with negative interest rates (rates below the inflation rate) plus easy, very easy, credit. How is credit created? It's created through borrowing. So the Fed and the Administration made it really sexy to borrow. The "carry trade" went into high gear, borrowing at low rates short term, while buying longer-term bonds paying higher yields. At the same time, US consumers plunged into the housing market. Instead of "a chicken in every pot," the modern slogan was "a mortgaged home for every family." And if you can't pay for the home, well get with it dummy, the government will even lend you the money for your down-payment.
So that's where we are today in the "ownership" society. Last Friday (taking in all three exchanges), 55 Finance stocks hit new highs, 25 building stocks hit new highs, and 13 banks hit new highs. Which can't be much of a surprise. Of course, with crude now just below 52 dollars a barrel, energy is the latest "hot area." Last Friday 141 assorted Energy stocks hit new highs. At this rate, it won't be long before the oil companies will own us here in the new "ownership society."
I've described how Alan Greenspan studied the 15-year deflationary Japanese bear market. That was the bear market where some Tokyo real estate dropped up to 90 percent from its 1989-peak. In Japan more than 80 percent of bank loans were tied to real estate, so the banks took huge losses and guess what -- the banks stopped lending. And today the Japanese are still trying to recover. After all, Japan's bull market high in 1990 was 40,000 and today the Nikkei is trading just over 11,000.
How about a bit of history? Greenspan made a careful study of the Japanese deflationary bear market, and he must have said to himself, "I failed to recognize the bubble, and that was (gulp) my fault. Now the stock market's caved in, and the US could be another Japan in the making. Well, damn it -- it isn't going to happen on my shift." Greenspan may also have read Richard Koo's informative book, "The Balance Sheet Recession." At any rate, Greenspan decided that it was time to fight the bear "tooth and nail." Next step, Greenspan drove short rates down to 1% and at the same time he flooded the system with liquidity. Meanwhile, the Bushies instituted two tax cuts. I mean, was this goosing the economy or what!
At around the same time, China and other Asian nations decided that they must keep the dollar strong versus their own currencies -- all in their intense battle to be able to export on advantageous terms. The result is described in this week's Economist magazine. In the meantime, with the dollar sliding (oil is traded in dollars) and with China and India becoming major oil competitors, the price of oil was heading north.
Here are some quotes from the article in this week's Economist --
"Saturated. The world's giant money printing machine. How loose is the world's monetary policy? One gauge is that real interest in America and other countries are still negative. Another is that global liquidity has been expanding at its fastest pace for at least 30 years. This deluge largely reflects the combined effect of American and Asian monetary policies.
"One measure of 'global liquidity' consists of the sum of America's monetary base (notes and coins plus bank's reserves held at the Federal Reserve) and foreign-exchange reserves held by the central banks around the world. In both 2003 and 2004 this rose at annual rates of more than 20 percent. In no other two-year period since 1975 has liquidity increased so much.
"America's easy money policy of recent years has spilled abroad. Low American interest rates have encourage large inflows of capital into emerging economies, especially those of Asia, as investors have sought higher returns.
"Central banks are supposedly the guardians of money. Yet between them they have created the biggest liquidity bubble in history."
Russell Comment -- So you want to know what's really going on? This is it -- we're currently living through the greatest and most fantastic liquidity bubble in history.
As inflation heats up even further, the world's central banks (maybe out of embarrassment or fear) will be forced to raise rates. Or somewhere ahead, the so-called "bond vigilantes will do the central banks' work for them. Somewhere ahead (nobody knows the exact timing) rising interest rates will run headlong into the world of leveraged and overvalued investments (think real estate). By that time Alan Greenspan hopes he will be safely out of office -- and hopefully out of sight.
source Midas http://www.lemetropolecafe.com/