Posts

Posted on

Germany Should Leave The European Union. Like Now!!!

BusinessWeek Writes:  German Euro Skeptics Could Give Merkel An Election Shock  

 investwithalex germany

German parliamentary elections are coming up on Sept. 22, and Chancellor Angela Merkel has a problem on her hands. A euro-skeptical political party known as AfD is rising in the polls and could deny her Christian Democratic Union and its coalition partners the majority they need to continue governing.

AfD, or Alternative for Germany, currently holds no seats in the Bundestag, and until recently it barely registered in public-opinion polls. But a survey released on Sept. 4 by the Forsa polling group showed it with 4 per cent support—just shy of the 5 per cent needed to win Bundestag representation. Peter Matuschek, Forsa’s chief political analyst, says the poll may have underestimated the party’s strength. Many supporters, he told Spiegel, “are too embarrassed to admit that they are planning to vote for the AfD,” which wants Greece, Spain, and other crisis-hit countries to leave the euro zone, and possibly break up the existing monetary union itself.

Read The Rest Of The Article Here

An important election in Germany is coming up on September 22nd.

So important in fact, that the future of European Union is at stake. While most believe that Chancellor Merkel will maintain control, there is an increasing number of observers (including myself) that believe CDU will lose control.

Why is this so important? It could spell the end of the European Union as we know it. German people are fed up with supporting Greece, Spain, Italy and the rest of the freeloaders.  European Union is a  mess on multiple levels. While it is a great idea on paper, culturally speaking there is just too many differences on both the economic and cultural level.

Germany is an economic powerhouse and it should act like it.  I believe German people feel the same way and will act accordingly in 12 days.  If Merkel losses control, I have a hunch that it will set Germany on the course to eventually leave the European Union and go back to the Deutsche Mark.  This would lead to a huge surge in German Economy and that is all that German people should care about.

As soon as that happens, European Union will collapse under its own weight. While most people believe that it would be a bad, I respectfully disagree. I think it would be a boon to all European countries for various reasons. All we can do now is wait and see.  

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Posted on

GOLD

investwithalex gold

 

People keep asking me about Gold and other precious metals.

Short Answer:  I have no idea. I am too stupid to understand the metals in order to predict them.

Longer Answer: I have studied Gold for a while now and have heard every bullish and bearing argument for or against it. I understand inflation, deflation, safety and currency issues associated with precious metals. However,  I cannot put a complete analysis together in order to give you a legitimate answer.

Basically, precious metals are too complicated.  Some people see it as money, others as inflation/deflation hedge, then you have fundamental/industrial demands for the metals, then there are national reserves, etc….

All of those points are easy enough individually, but when you put them all together you get a lot of interference and noise without any clear direction. Perhaps it is easier for other people to understand, but it simply does not make sense for me.

I cannot see any fundamental reasons for owning gold.  Is it a hedge against inflation/deflation?  Not really. I would rather hold US Dollars in a deflationary environment and a portfolio of inflation protected stocks in an inflationary environment. Plus, the long term gold chart doesn’t look good from a technical stand point. It is either showing a sideways movement or a breakdown.

investwithalex gold chart

Can Gold and other precious metals appreciate significantly here? Sure, but they can also break down. Once again, I have no idea, nor do I find myself qualified to issue an appropriate opinion. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Posted on

Cash Is King

Bloomberg Writes: Why Cash Costs the U.S. Economy Real Money

 Investwithalex_cash

The use of dollars and coins costs the U.S. economy at least $200 billion each year—roughly $1,739 per household—according to a new study from Tufts University. One reason: Americans waste an average of 28 minutes each month just getting to their cash, with part-timers, retirees, and African Americans likely to spend even more time accessing their money. The worst hit, not surprisingly, are low-income consumers, who are dinged with higher fees, along with the lost time.

For businesses, the biggest cost of cash comes from theft. Even if they can afford armored cars and guards to prevent outsiders from taking their cash, there’s still the risk that insiders will drain the coffers. Government, meanwhile, pays a price in lost tax revenue and the cost of actually making currency.

As technology continues to surge forward there is a considerable push from various interest groups to become a cashless society.  Articles such as the one above are clearly sponsored by the Banking Industry with their own agenda, but there is an important red flag here that you should be aware of.

Call me old fashioned, but I love cash. It’s a great feeling to hold a stack of crispy new $100 bills in your hand and smell them once in a while.  Just one second, I need to go do that…..

All joking aside, this is an important matter that can have real implications on your life.  As I have said before,  cash is king. It is the only thing that you will have control over if something does goes wrong. In the worst case scenario none of your stock holdings or bank database entries will mean anything. They will be worth ZERO.  Cash could be your insurance policy and as such I would suggest keeping a considerable amount of cash that is readily available to you.

Do not buy this nonsense that using cash has real economic cost. The real cost here is losing your freedom and being at the mercy of large financial institutions and/or governments. Remember Cyprus? It reminds me of a time when I tried to withdraw $125,000 in cash from my Bank of America account.  They looked at me and said “Sir, I am sorry, but we do not have that much cash available. It will take us a few days to get it”.

Fair enough, but I do not want to find myself in such a situation ever again. Therefore, I would highly recommend having a considerable amount of cash stashed away somewhere safe for your own good (preferably not in your mattress). It’s a great feeling. Trust me. Mine is buried somewhere in the Nevada desert. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Posted on

12 Years Ago

world_trade_center invest with alex

We all know what happened on that fateful day and atrocities committed against innocent people. However, I choose to remember it for something good.

I remember being in Pacific Beach, San Diego on September 11th, around 9 pm. There were American flags everywhere and a ton of people outside. Everyone was either sitting quietly on the street curb in deep thought or talking. There were candles everywhere. Cars driving by with American flags sticking from the windows, honking like crazy.

I have never seen anything like that. The entire nation came together. There were no longer political parties, rich or poor, black or white. At that instant everyone was simply an American.  A beautiful site to behold indeed.

sept11

Today I will a grab a beer in memory of all of those innocent people who lost their lives. Irregardless of your views on the subject matter, I suggest you do the same.    

 

 

Posted on

China Is An Economic Disaster Waiting For Implosion

CNBC Writes: Why China property is immune to tapering

china_real_estate_bubble_debt_collapse

China’s property market is unlikely to take a hit from tighter liquidity when the Federal Reserve finally pursues the much-anticipated tapering of its bond buying program, said Wang Jianlin, chairman of Dalian Wanda, a commercial property-to-karaoke-outlet conglomerate, as well as China’s richest man according to Forbes (Bombay Stock Exchange: 502865-BY) magazine.

“The tight liquidity will push up interest rates. But I don’t think interest rates will go up by too much,” Wang told CNBC in an exclusive interview, adding China’s economy also doesn’t move in lock-step with global markets.

“Because the profit margin for China’s real estate industry is above the global average, a 1 percent to 2 percent rise in interest [rates] will have very limited impact on the profit margins of bigger property players,” added Wang.

China property developers’ gross margins were around 34 percent in the first half of the year, UOB (Singapore Exchange: UOBH-SG) Kay Hian said in a recent report on the developers it covers. It noted the second half is usually stronger.

Wang also expects Beijing to re-focus its sector cooling measures, with property firms to soon be allowed to refinance after a nine-year hiatus on the segment’s IPOs, in a move set to spur further development.

The Shanghai Securities Journal reported last week that detailed regulations on refinancing approval would be released in a couple of weeks at the soonest.

“China’s economy now needs the property industry,” Wang said. “Given the decline in export and investment, China’s economy has turned from high growth to moderate growth with further downside risks.”

Deutsche Bank (XETRA:DBK-DE) also expects Beijing’s drive toward urbanization to offer a long-term fillip to the property sector. The “new form” of urbanization will include developing big city-clusters, rather than just a few big cities, with more urban retail properties in Tier two, three and four cities, it said in a recent report.

“We expect domestic consumption to pick up given higher urbanization and higher productivity,” the investment bank said.

Wang is also bullish on China’s consumption outlook in the longer term. “This will be key for the country’s future economic development,” he said. Wang’s Wanda Dalian conglomerate operates 57 department stores. “By 2015, China is set to become the largest consumer market in the world at over CNY30 trillion ($4.9 trillion).” 

Immune? Sure, just as I am immune from dying.

If you have been to China over the last couple of years you have seen it firsthand.  There is so much real estate development that it is a site to behold. There are literally entire cities coming up all at once in the middle of nowhere.  I was impressed and I am not that easily impressed.

The problem is, most of these developments are driven by speculation and capital misallocation. The majority of these developments are empty, bought by Chinese speculators using multi generational savings and loans.

What surprised me the most is that not a single Chinese person I talked to (and I was mostly talking to very intelligent business/government folk) even remotely worried about this issue. Every single one of them said something to the tune of….”Real estate will always go up in China, if market begins to decline our Government will backstop it to prevent losses. There is no risk, it’s an easy way for us to make money.”

I didn’t want to argue with them to prove my point, but such a statement by itself is a clear indication of a speculative bubble.  Any reliance on the Chinese Government to prevent or stop a collapse from happening is just an illusion at best. Those who study financial markets know that there is no way to prevent or to stop a collapse when it happens. I don’t care what kind of a government it is. Not even GOD can do.

China is a fiscal time bomb that will eventually go off.  I believe that time is coming up very soon. When that happens Chinese property bubble will implode, millions of Chinese families will lose their multi generational savings and that in itself will lead to political instability and a possible revolution.  Simple as that.     

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Posted on

Stock Market Update, Sept 10th 2013

Sept 10 2013 chart

The Dow is recovering nicely here, just as anticipated. As I have mentioned before the market was oversold and due for a bounce. I believe this bounce will take the rest of September to complete. 

What is interesting is that the market left a bunch of open holes (gap downs) on the way down around 15,500-15,400 range. After studying the market for many years, I have noticed something. The market doesn’t like these gaps. One way or another the market comes back to close the gap. Even if it takes years.

Other technical and timing works indicate that the market is likely to get into this 15,500 range by the end of September before reversing and heading down. As of right now I would still be in a waiting pattern, looking for various confirmation. There is no need to rush here. Stay patient. 

If you can, please share our blog with your friends as we try to get traction. Gratitude!!!  

BlogCatalog

Posted on

Americas Hidden Depression

Bloomberg Writes: Recession? Depression? One in Three Thinks So

great-depression-investwithalex

A third of Americans think the U.S. economy is in a recession or a depression and only one in six think it’s growing, says a new survey that also finds “deep-seated pessimism about the medium term.”

Americans are highly critical of policymakers, unwilling to take risks with their savings, planning to reduce their indebtedness over the next year, suspicious of the stock market, and more worried about inflation than unemployment, according to the survey released today.

The National Bureau of Economic Research has declared that the U.S. pulled out of recession more than four years ago—in June 2009—but a lot of people apparently didn’t get the memo.

The survey found that 85 percent of the 1,000-plus adults worry to some degree about their financial situation, compared with 90 percent three years ago. People who say they’re worse off than they were a year ago outnumber those who say they’re better off, 28 percent to 22 percent.

Read The Rest Of The Article Here

This is fairly easy to explain.  The survey above shows the true state of the US Economy. Even though the numbers shows that the US Economy has recovered significantly from the March of 2009 bottom, nothing could be further from the truth.

The recovery was fueled and financed by Credit Bubble Finance. Meaning that the US Government basically wasted about a Trillion Dollars (some claim a lot more) to prevent a complete collapse in the US Economic System.  However, the original “SIN” of massive credit expansion, cheap finance and speculation hasn’t been fixed yet. On the contrary, it has been made a lot worse.

Now the US Economy has massive imbalances that cannot be dismissed or fixed in any favorable fashion. It could only be done either through massive inflation or massive defaults. Even war is no longer a tool. 

I am sorry to say, but my timing work clearly shows that both of those things are about to happen. First, deflationary credit defaults from now till 2016 final bear market bottom (and 2018 secondary bottom), followed by accelerated inflation thereafter.

Unfortunately, in such a scenario no one wins, but it does pay to be prepared.  

If you can, please share our blog with your friends as we try to get traction. Gratitude!!! 

Posted on

Economic Lunacy

The Daily Ticker Writes: Krugman Overboard! Says Economic Policy a ‘Horrifying Failure’

economic crazy investwithalex

Nobel Prize-winning economist and New York Times columnist Paul Krugman argues in his new editorial that U.S. economic policy over the last five years has been “an astonishing, horrifying failure.” Krugman, a long-time critic of the Obama Administration’s stimulus efforts, writes that the U.S. government should have spent three times the amount of money it did to get the economy back on its feet:

“…if the U.S. government had actually been able and willing to do what textbook macroeconomics says it should have done — namely, make a big enough push for job creation to offset the effects of the financial crunch and the housing bust, postponing fiscal austerity and tax increases until the private sector was ready to take up the slack…we would be a richer nation, with a brighter future — not a nation where millions of discouraged Americans have probably dropped permanently out of the labor force, where millions of young Americans have probably seen their lifetime career prospects permanently damaged, where cuts in public investment have inflicted long-term damage on our infrastructure and our educational system.”

There you go. These are the idiots at the top of the US Economic Policy food chain.

“An astonishing, horrifying failure, the US Government should have spent 3 times the amount of money it did to get the economy back on track”

They are talking about an additional $3 Trillion in stimulus. WOW!!!. I am beyond speechless. I am not a big fan of either Bush or Obama administrations and what they did during the 2007-2009 meltdown.  In fact, I am a big proponent that they should have left the market alone and let a lot of those companies fail instead. That would have removed economic excesses out of the system a lot faster and we would now be in true economic recovery instead of this artificial credit induced one.

So, these Keynesian clowns believe that throwing more money at the problem would have fixed everything and brought prosperity to the US Economy?  I am starting to think that they don’t even understand basic math. Providing more stimulus here is equivalent to giving Lamar Odom a kilo of coke and saying “Go and shoot it all up at once. It will fix you right up.”   

With economic leadership like this, America has no chance of improving any time soon. A lot of economic pain is just around the corner. 

If you can, please share our blog with your friends as we try to get traction. Gratitude!!!

FU64H2X4HQRH

Posted on

China Is A Mess

Reuters Writes: China locks foreign investors out of another bad-debt cleanup

investwithalex shanghai

HONG KONG (Reuters) – Chinese banks have a colossal mess of bad debts to clean up for the second time in as many decades, but they are unlikely to call in the financial world’s most efficient mop and broom.

Foreign investors that specialise in buying up distressed debt are queuing outside the industry’s door, but bankers say China’s reluctance to pay the price of a privately funded clean-up means that door probably won’t open — to the cost of Chinese tax-payers and, ultimately perhaps, the wider economy.

Some economists believe the current mess will need a bigger clean-up than was required after the late-1990s Asian financial crisis. From 1999 to 2007, about $323 billion in bad loans were swept out of the banks, according to a PriceWaterhouseCoopers (PwC) review of media reports over the period, in what amounted to a taxpayer-funded bailout.

“Sometimes the door is open for foreigners to come up and make money, and sometimes it’s closed,” said one veteran debt specialist who has bought and sold Chinese debt for global investment banks. He declined to be named due to the sensitivity of discussing China’s sovereign debt.

“Our belief right now is that the door is closed.”

Read The Rest Of The Article Here:

It doesn’t look like it yet, but China is in a huge mess.  From outside it looks like an economic marvel growing at 7% per year, yet it is in huge trouble.  While a good chunk of Chinese economic growth over the last decade has been export and manufacturing related (which is great), some economist estimate that as much as 50-75% of that growth came from government debt and domestic property misallocation (aka building empty cities and roads to nowhere).

That is the primary reason Chinese banks don’t want foreign investors to look at their balance sheet or their assets. They know that as soon as someone looks at their debt they will be horrified of what they see.  At that point the news will get out and the state controlled economy that is China will not be able to control the outcome. The game will be up.  

As they say, ignorance is bliss. The Chinese economy will keep moving forward through the minefield until one of those mines goes off. I believe the time is at hand or will be shortly. At that point the jig will be up and Chinese economy will go through a severe correction.  

If you can, please share our blog with your friends as we try to get traction. Gratitude!!!

Posted on

Philippine Bureau of Internal Revenue(BIR) Is Now Training Their Agents To “Shoot-To-Kill” For Tax Evasion

BusinessWeek Writes: The Philippines’ Tax Sheriff Gets Tough

 Investwithalex philippine bir

When Kim Henares took over the Bureau of Internal Revenue in the Philippines three years ago, she began looking for tax dodgers by poring over the society pages of newspapers and magazines. She says that as a result, she sent federal prosecutors complaints against two television actresses, a doctor, and a Lamborghini-driving pawnshop owner. “If you’re ready to flaunt it, then you must have paid taxes on it,” Henares says.

Her take-no-prisoners approach is part of President Benigno Aquino III’s crusade to erase a Philippine legacy of graft. Not paying taxes is one of the nation’s most common forms of corruption; the government estimates that $10 billion, or 4 percent of gross domestic product, goes unpaid every year. Henares says it’s her job to claw back as much of that as she can, and “if people don’t like me, that’s fine.”

Her agency alleged in 2011 that former President Gloria Arroyo’s son Juan Miguel had evaded taxes. His mother, a friend of Henares’s in-laws, had played a prominent role at her 2001 wedding. The case is continuing. Ruy Rondain, Juan Miguel Arroyo’s lawyer, says his client believes the charges are politically motivated. “There’s no case, so they made one up,” Rondain says. Last year, Henares’s agency asked prosecutors to file charges against former world boxing champion Manny Pacquiao, who’s now a federal legislator, for allegedly failing to submit documents proving that he paid the correct amount of taxes in 2010. A city prosecutor declined the agency’s request to file charges. Pacquaio told the Associated Press the complaint against him was “plain and simple harassment.”

Henares doesn’t discount the official statistics as a sign of progress. But for proof that her crackdown is haunting the country’s moneyed elite, she points to a more informal source. Henares says her mother hears from acquaintances that it now can cost 60 percent more than in the past to bribe an official for help dodging taxes.

Read The Rest Of The Article Here

Of course the headline above is a joke.  I just wanted to bring as much attention as I could to the article for those living and/or working in the Philippines.

Overall it’s a great step forward for the country and it is always nice to see international recognition. As much as I hate paying taxes, it is one of the most important steps in fighting corruption and setting up a fair taxation environment that Philippines so desperately needs.

A fair taxation and representation system is a must key step for any future economic growth.  Without any such structure only a small percentage of the overall economy/people will benefit. I wish Kim Henares all the luck she needs.

If you can, please share our blog with your friends as we try to get traction. Gratitude!!!