muses of the moment

January 22, 2011

Fed accounting gimmicks

Filed under: Housing Market, The Banking Crisis, The Dollar Crisis, The Federal Reserve, US Government Debt — totallygroovygirlfriday @ 1:07 pm

Groovygirl thinks the Fed is anticipating Ron Paul asking uncomfortable questions, like is the Fed bankrupt, prove they are not?

This is truly amazing. Who do they think they are fooling? Unfortunately, since the majority of people do not understand how to read a balance sheet, probably everyone.

Net worth equals assets minus liabilities. If you have a negative net worth and are unable to sell assets, you are bankrupt. The new accounting rule means that they have no liabilities, so their net worth will never be negative. And they will achieve this act of magic permanently by moving their losses (the toxic debt they bought in 2008-2009) to the US Treasury. That’s you, American tax payer.

Amazing… here.

Not exactly sure what they are going to do when they have to buy more toxic mortgages. Maybe that is why they are clearing their liabilities, in anticipation of further removal of more toxic debt from US banks. Toxic debt is growing, we are not done.

Recent banking accounting rules have not gone quite as far as the Fed’s new rules. But has instead allowed banks to value their assets and liabilities (foreclosures and imploded derivatives) for any value they see fit until 2014. Thus hiding the fact that their net worth is really negative and they are bankrupt.

Now the economists on main street media will say that although the defaulted mortgages are losses today, they will regain value, and at some future date, will be valuable assets sold for cash, so indeed should be valued at that future value.

First, this is illegal. The bank will not lend you money based on the future value in 10 years of your home, they lend you money based on the current assessed value.

Second, as Martin Armstrong tells us, we are in a 26-year decline in the housing market, a decline that started in 2007. The banks will NEVER recover the value of their mortgages, toxic or grade A. This is why all US banks are insolvent, period. Accounting gimmicks will not change the coming final 90% contraction in US housing values, finally bottoming somewhere around 2032.

January 21, 2011


Filed under: Gold and Silver Investing, Odds 'n ends — totallygroovygirlfriday @ 9:35 am

Just a quick note not to panic about the recent drop in gold and silver. We are still within a normal trading range, and could even go as low as $1030 in gold. This is a buying opportunity for those who are holding physical gold and silver long-term. Gold will go to at least $5000, so buying at $1000 or $1300, doesn’t make much difference. Besides, physical gold and silver is your insurance for the coming currency collapse.

Silver is still a better buy than gold at the moment.

Extreme volatility in markets means that fundamentals are out the door, day traders panic at rumors, and the markets are rigged by central banks. All these things will come to light and price suppression will not be possible.

Groovygirl suggests that you do not trade gold or silver in this environment unless you know what you are doing, work for a company that front-runs the market, and can afford to lose all the money you trade.

The possibility of the bankruptcy of the states is looming in the background. All state and local pensions are toast. Click here for a very telling chart. In some circles, this is called “a run”.

Never sell your physical gold and silver position until the currency crisis is over.

Leap 20/20 2011 update

It ain’t pretty…click here. 2011 will be the beginning of the end and the most chaotic year since 2006.

January 20, 2011

Steve with Global Perspectives

Steve Meyers is interviewed on Global Perspectives. Click here.

Groovygirl disagrees with Steve that QE3 will not happen. Fed will print money until US citizens are in the streets. It may not be called QE3 or formally announced, but it will continue until it doesn’t work anymore. Fed will continue to bail out Europe, thus printing money globally.

But groovygirl agrees with Steve’s thoughts that it will break down and we are in a catch-22. Groovygirl just thinks that the US admin and Congress and Fed is so disassociated from Main Street and the World’s view of the US that they will continue past 2011.

Bill Fleckenstein

Filed under: Fiat Currency, Gold and Silver Investing, Housing Market, Odds 'n ends, Precious metals — totallygroovygirlfriday @ 1:36 am

Great interview of Bill by Chris Martenson. Click here. USDollar wins race to the bottom!

Great points made by both men in this interview. Bubbles, behavior is modified on business and individual level, and the USDollar.

January 19, 2011

Short term update from Alf Fields

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 9:02 am

Alf Fields comes out of hiding to chart the short-term gold price. Click here.

Alf Fields mentions that we are in major bull wave 3, that is a price range of $700-$3500. The link above charts a smaller waves within that larger wave. Wave 3 is typically the largest wave up in price movement. We will not be done with this bull market up until we reach $3500. Click here for a 2008 post about that wave. (Thanks to BB for the link.)

Checking in again with this long term picture in gold (and silver):

Still plenty movement on the upside. Be careful trading gold. I link to people like Alf Fields, Jesse, and Martin Armstrong to share possible dips in price to buy, not to trade. The time to trade gold was in wave 2. It is now time to buy and hold a major position through wave 4 and onto wave 5.

Looking ahead, if you want to sell a portion of your holdings before the wave 4 correction, that’s OK. But make sure you have the capital and ability to get back into the physical gold market before wave 5. Will you be able to get physical gold in wave 5? (Groovygirl is not taking any chances and is holding physical gold throughout the wave 4 correction.) Wave 5 will not just be a final wave in this gold bull market, it will be a currency crisis, a collapse of the US Dollar. You do not want to be holding fiat currencies during wave 5.

As I have discussed before, government policy will determine of you sell or not at the top of wave 5. We will wait and see.

January 18, 2011

More on the gold and silver manipulation

Click here for Jesse’s take on the silver shorts and quotes from Harvey Organ’s blog.

Something is definitely going on here. But what I am unsure. This is not a free market. Be careful trading. However, when this finally breaks, physical will go to the moon.

Hinde Capital Investment Letter

Filed under: Odds 'n ends, Tangible Assets — totallygroovygirlfriday @ 1:03 pm

Click here for Hinde Capital’s 2011 investment letter (45 pages). Excellent commodity/food analysis, worth the long read.

Take special note of the reoccurring reference to measuring commodities against gold to more accurately chart the real value and movement in the market. This will become a valuable calculation to investors in the future from food to real estate. How many gold (or silver) coins does it take to buy a product in 2001 vs. now vs. 2015? This calculation doesn’t work in all cycles, but in the current cycle of collapsing debt and a loss of purchasing power, it is a quick and easy way to determine value.

Also note the wonderful chart on page 41 entitled, Gold: The Currency of First Resort. This chart shows that in 1970, the price of gold overshot M3 money supply. Gold throughout history goes through cycles where they are overvalued and then undervalued vs. the money supply. Gold always corrects at some point in the cycle for the over supply of money in the financial system. Nineteen-eighty was the last time that happened. We will over shoot again. Depending on if they freeze it there to create a new currency or let it fall again will determine when and if you sell gold. The more money they add to the system, the higher the nominal gold price will be. When John Williams talks about the inflation-adjusted gold price should be over $7500 today, this is what he is talking about. Gold is undervalued.

Another gold prediction

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 12:32 pm

Click here for MKS Group’s take on the trading range for gold and silver for 2011.

January 17, 2011


Filed under: Bank bailout, DOW and S&P500, Odds 'n ends — totallygroovygirlfriday @ 1:27 am

Quote from Jim Sinclair’s website, so true!

Jim Sinclair’s Commentary

Why do you not hear screaming and crying on this? Could it be because the great profits of all these bankers was a mark up on the crap paper they held after FASB sold their souls to the devil?

Getting rid of the trading departments is akin to what you do with a restaurant after using it as a money laundering facility – you burn it down.

Morgan Stanley to spin off prop trading desk
By Justin Baer in New York
Published: January 10 2011 21:33 | Last updated: January 10 2011 21:33

Morgan Stanley agreed to spin off its last big proprietary trading desk by 2012 in a move that brings it a step closer to meeting new US rules on banks betting their own capital.

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