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Toto deVeer

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Everything posted by Toto deVeer

  1. Disclosure: 0% gold, 100% dollars since Dec 2009. I have, to now, the view that gold has been in a bubble. However, one must always be in a position to review and re-evaluate their hypotheses, especially in the very unpredictable situation that we currently experience. Rumours notwithstanding, I am coming to the view that there is a fundamental shift occurring away from fiat currency. IMO, this has to do with mass psychology, and confidence, more than anything else, driven by the recent EU actions. I have shifted my view to the position that gold has now taken on the role of another major (anti-fiat) currency; especially since April of this year. With this view, historically, major currencies just don't bubble, and don't collapse. They vary against one another. And I do not see confidence building in fiat currencies any time soon. Whereas I would have previously considered gold to be just another speculative play, I now consider it amongst a basket of currencies that can be used to maintain purchasing power. I think that this view is gaining traction on a widespread basis. Gold, for the individual investor, is not for extremis conditions, as many would think. It has it's greatest benefit in times of sovereign stress, but not collapse. In extremis conditions, it is really most useful for countries, not individuals. For individuals, gold is useful in so much as its ability to be transferred to fiat currency, and its ability to maintain purchasing power in multiple fiat currencies in times of sovereign stress. In a total sovereign collapse, however, the best assets for individuals to have are land, crops (food) and guns. I agree that the gov't, in extremis conditions, will attempt to confiscate gold it or at the very least tax it to oblivion. Perhaps this is why Americans were reported to have purchased 9 million guns and 14 billion rounds of ammunition in 2009. So, I will be monitoring gold over the coming few months, and on the pullbacks, I shall be acquiring it, as a part of a basket of currencies.
  2. OK, more precisely...West Germany. However, both legally and practically it would not be difficult to introduce within present Germany a DM currency that coexists for some time with the Euro. In fact, it appears that right now, by law, the DM must be accepted in Germany indefinitely. In legal terms, it has never ceased to be a medium of exchange, as I pointed out in another post. The UK illustrates how a member of the EU may exist outside the Euro (and Switzerland is in some sort of quasi-Euro position). There is absolutely no reason why Germany could not migrate to the same position, and relatively quickly.
  3. Here, here! I have to say that I was really surprised by Mervyn King's support of LPB, as I agree with you that the banks will fight this to their last gasp. LPB is the answer to long term stability, in my view. The noises I hear in the UK are extremely positive; the manifesto being developed by the Coalition, and the ideas of Mervyn King, if implemented, could place the UK decades ahead of the rest of the world. I just hope they do it fast, before the financial attacks get underway...
  4. I'm not so sure. If you start a property tax (something the LibDems have talked about) the landlords will simply increase rents to compensate. If you remove tax relief on interest, the same will happen. But if you place capital gains tax at the point of sale then there is no incentive to increase rents, at least as I see it. The tax is outside the tenants domain, and is squarely in the landlords domain. This is the fundamental problem with taxation of rental or BTL property; in most ways it hurts the tenant. [Edit] However, as so many of these properties are under water, I'm not sure that this tax will lead to substantial revenue in the short term.
  5. Naked shorting is the same as counterfeiting shares...not good... Are you sure you're not talking about something like naked options?
  6. Personally, I don't think this information can be spread fast enough, I'd like to see a post on it every day Good to see you're benefiting, nicklaus! What you are looking at is a proposal for an inelastic credit based currency, versus our current elastic debt based currency. Both cases are called 'Fiat' currencies, but they function entirely differently. Inelastic Versus Elastic Currency What do we mean by elastic and inelastic? Elastic currency (that we currently use) means that when a bank receives a deposit, it can lend out 92% of it, and keep a reserve in the bank of just 8% (this is also called 'fractional reserve banking'; Ben Bernanke wants to reduce this reserve requirement to zero, and some argue that this is already the case in practice). For this reason, there is a need for a government guarantee on savings, because the bank cannot possibly pay back all depositors at once with just 8% or the original capital. This is why we have bank runs. An inelastic currency, on the other hand, means that the reserves must be equal to the deposits. Now the proposed Banking Act calls for an inelastic currency. In this instance there is no need for a government guarantee. So the banking system becomes much more stable and government intervention is reduced. One downside is that loan interest rates may increase, due to the effects of leverage. Interestingly, Mervyn King favours a new system currently promoted by certain American Economists. This system also calls for 100% reserves. So the BOE and this Act are somewhat in agreement on the concept of inelastic currency. As a diversion, in the USA, the Federal Reserve Note (FRN) of the 1913 Federal Reserve Act is a fractional reserve, elastic currency, created from debt. The USA also has another note, not in circulation, called a US Note. The USN is an inelastic currency. Debt Versus Credit Currency Now we consider debt vs credit based currency. Presently we have a debt based currency. This proposal is for a credit based currency. Our current debt based currency is money that is created out of debt. That is, to create the money (I use the term money loosely), the Treasury issues bonds, with an associated interest rate, and then with these the BOE issues an equivalent sum of money. So the money is created from debt. From this there is a promise to repay the principle, a time limit and an interest (coupon). For a credit based system, no debt is issued. Instead, the Treasury spends the money into existence for Public Works, healthcare, or other essential public services. This is the money that is put into circulation. Now in a credit system, the money created is applied against labour and the physical world, like infrastructure. There is no debt. In fact, a credit based economy does not need to incur a national debt. The greatest danger is that there is too much money put into circulation, leading to inflation. But this problem exists in any system where money is created. OK. Lest you say this is pie in the sky, you should note that from the great depression until 1969, Canada ran a credit based economy very successfully. Only when financial interests took over did they shift to the current system, to the detriment of the people there. There is no need for income taxes either. In the United States, an inelastic credit system with no income tax was in place until 1913, when the people's sovereignity was stolen by a group of private bankers, via Woodrow Wilson, perhaps the most corrupt and evil politician to ever grace American shores. At the same time, the income tax was introduced, both acts being outside the United States Constitution. The Federal Reserve is a privately owned organization, and it is claimed the US government has payed the FR over $6 trillion in interest since it's inception. But the original FR Act was only good for 20 years, and in 1933, FD Roosevelt signed into law an indefinite extension of the FR Act and confiscated private gold coin. Prior to this, Americans possessed more gold coin per capita than any other country on earth. By 1971, the US Government had squandered a large part of this wealth and went off the gold standard. This ushered in the derivative age of financial capitalism, that thrives on a debt based fiat currency. We are suffering from this greatly as I write. Closure So what this comes down to really is the bankers against the people. They, being given control of our sovereign currency by crooked politicians, issue our own currency to us as a debt to them. It will only be when the current debt based, fractional reserve system is broken, and retail banks become like public utilities, that the world can become stable and the people become prosperous again. Importantly, the collapse of the prior debt-based Venetian banking Empire and the default of their sovereign debtor states France and then England (around 1340), led to the dark ages.
  7. I think that these are start-ups for new green technologies and r&d type stuff. And they might lump any start-up below a certain size into this category, but this would be way below the size of a BTL type of business. This is a page from Thatcher's playbook.
  8. Thanks for the excellent article. But I would've thought that the body scanners and x-ray machines would pick these things up. Maybe they've been using diplomatic passports?
  9. The real problem on sovereign debt, imo, is CDO/CDS derivatives. The issuance of these disconnects the source of money (the lender) from risk. This in turn leads to the mispricing of risk (as interest). Then when the borrower cannot pay, the source of the money (the lender) has no reason to come back to the table and negotiate terms. Default is the only option. This is Greece's problem. If they default, their lenders probably stand to make more money than if they repay. This instils a perverse incentive at the time the contract between parties is agreed and signed, and presents an asymmetric risk situation. It is for this reason that these derivatives, in their current form, must be banned. The CDS/CDO markets have also allowed a shadow banking system to evolve, which is going to push it's losses onto the real banking system. This is what really caused the collapse of 2007 to today. These instruments, in their current form, must be banned.
  10. In the USA, this question was addressed by the Supreme Court after the crash of '29. They ruled that short selling was fair and provided a useful function for the market, and actually could buffer the fall in the price of a share. However, in the late 1990's the CFTC allowed a change in the settlement rules that permitted what is called 'naked short selling'. This is something devious and, in fact, fraudulent. Who drafted this clause? None other than our old friend Bernie Madoff. Has it been changed? Not yet to my knowledge. What it allows is an extended period (more than a week, I believe) to settle the borrowed shares for a given short sale. What this effectively means is that an unscrupulous party can actually dramatically increase the number of shares of a publicly traded company, well beyond the demand. This destabilizes the share price equilibrium causing a collapse in the value of the shares, and a collapse of the company. Compounding this is the fact that if a share value falls to almost zero, the 'naked shorting' party does not need to technically close out the position; therefore no capital gain is recorded and no tax is paid on it. Nice little racket, huh. As far as I know these rules have not been changed. Maybe someone here can enlighten me on this. It is suggested that these rules have led to organized crime syndicates participating in, and fraudulently drawing out trillions of dollars from the US markets. Europe on the other hand, recognized the dangers of this and has not allowed this change to the settlement period. It is speculated that the somewhat mysterious death by car crash of a top Austrian politician a few years ago may have been payback for blocking this legislation. Nasty business.
  11. Hey Y'All, Here's some interesting info: "The Deutsche Bundesbank has guaranteed that all German mark in cash form may be changed into euros indefinitely, and one may do so at any branch of the Bundesbank in Germany. Banknotes can even be sent to the bank by mail." http://en.wikipedia.org/wiki/German_Mark Also interesting to note that during the introduction of the Euro the Eurozone countries (outside Germany) allowed the use of dual currency.
  12. Yeah baby! Move everybody to the electronic money grid so that the banks can remove all remaining dignity...
  13. No no no... Bankers have fat fingers, remember last Thursday? Pushing the 'b' when they really meant to push the 'm'.. 'But Officer it was just an honest mistake!'
  14. This is a very strange announcement (puts on tinfoil hat...). OK, if 9/10 500 Euro notes are used by criminals, then why not just surveil people who use them, rather than banning them outright? Seems a good way to discover criminal activity. On the other hand, is this an attempt to impose capital controls without declaring it?
  15. I think that if you track the longer history of house prices, you will see, for example, that the Nationwide shows a long term return of 1.2% per annum. Not such a good return for a pension company. I also understand that housing returns have tended to be higher under Labour administrations than Conservative ones. If this coalition can hang together, and I sincerely hope they do, they will reshape the property landscape much for the better of the total economy, although there is going to be some short term pain in the property market.
  16. On this note; whatever happened to ol' Fergus Wilson? It seems that the Conservatives want to use CGT to close tax loopholes for the Hedge Fund industry, and the Lib Dems want to use CGT to close off multiple property investors. There is not really a shortage of housing as much as a concentration of properties in the hands of a few...
  17. Hahaha... I think you're enjoying this redalert... I know I am...
  18. One thing to keep in mind is that only about 3% of currency in circulation is notes, the rest, electronic. Never in history has there been a period where it was easier and cheaper to create a fiat currency...
  19. If I'm not mistaken, the French banks have lent about 28 billion Euro to Greece... So they are definitely Club Med if Germany goes...
  20. Well, at any rate, here's a pre-release message of good-bye for Friday from Germany's Merkel to the PIIGS economies... http://www.youtube.com/watch?v=wImXeaVFVGU
  21. They should have put tin foil inside their helmets. By the way, MIT actually carried out research on tin foil hats. They found that there was no protection offered, and in fact certain frequencies were amplified...specifically within the wavelengths issued only to military and certain government organizations...
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