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Image | The Unsafe Foundation of Our Housing ‘Recovery’
The Unsafe Foundation of Our Housing ‘Recovery’
by charleshughsmith

What could go wrong with the housing 'recovery' in 2013?

To answer this question, we need to understand that housing is the key component in household wealth. And, that Central Planning policies are aimed at creating a resurgent “wealth effect,” as follows: When people perceive their wealth as rising, they tend to borrow and spend more freely. This is a major goal of U.S. Central Planning.

Another key goal of Central Planning is to strengthen the balance sheets of banks and households. And the broadest way to accomplish this is to boost the value of housing. This then adds collateral to banks holding mortgages and increases the equity of homeowners.

Some analysts have noted that housing construction and renovation has declined to a modest percentage of the gross domestic product (GDP). This perspective understates the importance of the family house as the largest asset for most households and housing’s critical role as collateral in the banking system.
The Unsafe Foundation of Our Housing ‘Recovery’
 by charleshughsmith

What could go wrong with the housing 'recovery' in 2013?

To answer this question, we need to understand that housing is the key component in household wealth. And, that Central Planning policies are aimed at creating a resurgent “wealth effect,” as follows: When people perceive their wealth as rising, they tend to borrow and spend more freely. This is a major goal of U.S. Central Planning.

Another key goal of Central Planning is to strengthen the balance sheets of banks and households. And the broadest way to accomplish this is to boost the value of housing. This then adds collateral to banks holding mortgages and increases the equity of homeowners.

Some analysts have noted that housing construction and renovation has declined to a modest percentage of the gross domestic product (GDP). This perspective understates the importance of the family house as the largest asset for most households and housing’s critical role as collateral in the banking system.
Image | Off the Cuff: Things are Getting Interesting
Off the Cuff: Things are Getting Interesting
 PREVIEW
by Chris Martenson

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The FOMC Freak-out
    • Why markets dove after the Fed minutes were released
  • Stocks Slip, PMs get Slaughtered
    • Why the markets look very treacherous from here
  • The Sinister Sequestration
    • What will likely result if it happens
Off the Cuff: Things are Getting Interesting
 PREVIEW by Chris Martenson

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The FOMC Freak-out
    • Why markets dove after the Fed minutes were released
  • Stocks Slip, PMs get Slaughtered
    • Why the markets look very treacherous from here
  • The Sinister Sequestration
    • What will likely result if it happens
Image | Gold’s Regular Morning Mugging
Gold’s Regular Morning Mugging
by Adam Taggart

Not everyone is a morning person. And few people like Mondays.

But if you're a precious metals investor, mornings – especially Mondays – are brutal.

The Evidence

The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.

Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.

Gold’s Regular Morning Mugging
 by Adam Taggart

Not everyone is a morning person. And few people like Mondays.

But if you're a precious metals investor, mornings – especially Mondays – are brutal.

The Evidence

The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.

Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.

Image | James Howard Kunstler: The Dangers of the Age of Delusion
James Howard Kunstler: The Dangers of the Age of Delusion
by Chris Martenson

It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen. 

James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.

James Howard Kunstler: The Dangers of the Age of Delusion
 by Chris Martenson

It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen. 

James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.

Image | Off the Cuff: When the Wheels Will Come Off
Off the Cuff: When the Wheels Will Come Off
 PREVIEW
by Chris Martenson

In this week's Off the Cuff podcast, Chris and Charles discuss:

  • The (Dire) State of the Union
    • The money for the Administration's grand vision just doesn't exist
  • The Housing Market
    • Bubble pricing returning to several markets
  • Currency wars
    • Why the dollar will likely strengthen further from here
  • The Next Correction
    • Here by summer?
Off the Cuff: When the Wheels Will Come Off
 PREVIEW by Chris Martenson

In this week's Off the Cuff podcast, Chris and Charles discuss:

  • The (Dire) State of the Union
    • The money for the Administration's grand vision just doesn't exist
  • The Housing Market
    • Bubble pricing returning to several markets
  • Currency wars
    • Why the dollar will likely strengthen further from here
  • The Next Correction
    • Here by summer?
Image | The Real Reason the Economy Is Broken (and Will Stay That Way)
The Real Reason the Economy Is Broken (and Will Stay That Way)
by Chris Martenson

We are far enough and deep enough into the most heroic monetary and fiscal efforts ever undertaken to finally ask, why aren't these measures working?

Or at least we should be.  Oddly, many in DC, on Wall Street, and the Federal Reserve continue to steadfastly refuse to include anything in their approaches and frameworks other than "more of the same."

So we are treated to an endless parade of news items that seek to convince us that a bottom is in and that we've 'turned the corner' – often on the flimsy basis that in the past things have always gotten better by now.
The Real Reason the Economy Is Broken (and Will Stay That Way)
 by Chris Martenson

We are far enough and deep enough into the most heroic monetary and fiscal efforts ever undertaken to finally ask, why aren't these measures working?

Or at least we should be.  Oddly, many in DC, on Wall Street, and the Federal Reserve continue to steadfastly refuse to include anything in their approaches and frameworks other than "more of the same."

So we are treated to an endless parade of news items that seek to convince us that a bottom is in and that we've 'turned the corner' – often on the flimsy basis that in the past things have always gotten better by now.
Image | Time to Choose
Time to Choose
by Adam Taggart

Whether you’re aware of it or not, a great battle is being waged around us.

It is a war of two opposing narratives: the future of our economy and our standard of living.

The dominant story, championed by flotillas of press releases and parading talking heads, tells an inspiring tale of recovery and return to growth. 

The other side, less visible but with a full armament of high-caliber data, tells a very different story. One of growing instability, downside risk, and inequality.

As different as they are in substance, they both share one fundamental prediction – and this is why you should care: This battle is about to break. And when it does, one side will turn out to be much more ‘right’ than the other. The time for action has arrived. To position yourself in the direction of the break you think is most likely to happen.

It’s time to choose a side.
Time to Choose
 by Adam Taggart

Whether you’re aware of it or not, a great battle is being waged around us.

It is a war of two opposing narratives: the future of our economy and our standard of living.

The dominant story, championed by flotillas of press releases and parading talking heads, tells an inspiring tale of recovery and return to growth. 

The other side, less visible but with a full armament of high-caliber data, tells a very different story. One of growing instability, downside risk, and inequality.

As different as they are in substance, they both share one fundamental prediction – and this is why you should care: This battle is about to break. And when it does, one side will turn out to be much more ‘right’ than the other. The time for action has arrived. To position yourself in the direction of the break you think is most likely to happen.

It’s time to choose a side.
Image | QE for Dummies
QE for Dummies
by Chris Martenson

A PeakProsperity.com reader recently lamented:

I have been trying to get my head around the mechanism of QE. Not being an economist or experienced investor I don't really understand a lot of the jargon. The usual simple definition of QE as "thin air money printing" does not satisfy my need for understanding either. Have hunted for a description of QE for dummies that leaves me feeling like I get it, but with no luck. My difficulty is in understanding how thin air money gets into circulation.

So I'm going to do my best to answer this plea in as intuitive and straightforward a manner as I can. I, too, share the need to understand the mechanism of a process in order to feel like I have a grasp of it.  And I think it's critically important to understand QE (also known by its full name, "quantitative easing") and what it really represents. Because it is, without a doubt, one of the largest market-shaping forces of our times.
QE for Dummies
 by Chris Martenson

A PeakProsperity.com reader recently lamented:

I have been trying to get my head around the mechanism of QE. Not being an economist or experienced investor I don't really understand a lot of the jargon. The usual simple definition of QE as "thin air money printing" does not satisfy my need for understanding either. Have hunted for a description of QE for dummies that leaves me feeling like I get it, but with no luck. My difficulty is in understanding how thin air money gets into circulation.

So I'm going to do my best to answer this plea in as intuitive and straightforward a manner as I can. I, too, share the need to understand the mechanism of a process in order to feel like I have a grasp of it.  And I think it's critically important to understand QE (also known by its full name, "quantitative easing") and what it really represents. Because it is, without a doubt, one of the largest market-shaping forces of our times.
Image | Running on Fumes
Running on Fumes
 PREVIEW
by Chris Martenson

The stock market blasted higher, with the Dow crossing the 14,000 mark because the jobs report came in well under expectations.  In today's world, one follows the other.

In yesterday's world, the one where logic and reason ruled the day, that first sentence would not have been written.  Economic weakness would not have been rewarded with a big surge in stocks.

But this all makes perfect sense in today's world, once you tilt your view to the "new normal" and get with the program.

I titled this piece 'running on fumes' because, in one very real sense, that's exactly what this current market is doing.  The fumes in this case happen to be thin-air money that the Fed is injecting into the financial markets to the tune of $85 billion per month, or roughly $4 billion per working day.

When an engine finally runs out of gas and turns to fumes, the last act of that engine is to run really hot – to race for a while – before finally quitting.
Running on Fumes
 PREVIEW by Chris Martenson

The stock market blasted higher, with the Dow crossing the 14,000 mark because the jobs report came in well under expectations.  In today's world, one follows the other.

In yesterday's world, the one where logic and reason ruled the day, that first sentence would not have been written.  Economic weakness would not have been rewarded with a big surge in stocks.

But this all makes perfect sense in today's world, once you tilt your view to the "new normal" and get with the program.

I titled this piece 'running on fumes' because, in one very real sense, that's exactly what this current market is doing.  The fumes in this case happen to be thin-air money that the Fed is injecting into the financial markets to the tune of $85 billion per month, or roughly $4 billion per working day.

When an engine finally runs out of gas and turns to fumes, the last act of that engine is to run really hot – to race for a while – before finally quitting.
Image | James Turk: Central Banks are Losing the War to Suppress Gold & Silver Prices
James Turk: Central Banks are Losing the War to Suppress Gold & Silver Prices
by Chris Martenson

My guess is that 2013 and 2014 are going to be big up year for the precious metals, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher.

So predicts James Turk, founder and Chairman of GoldMoney.com.

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income. What it is, is money. Its function is to store wealth.

But money, like investments, can be overvalued or undervalued. And what we’re witnessing on the world stage is a gross mispricing of money as central banks engage in depreciation of their fiat currencies via inflation (i.e., money printing).

The process causes a transfer of wealth from those holding overvalued money to those who hold undervalued money. That’s what’s been going on for the past decade as the price of gold has steadily marched upwards versus fiat currencies.

But this process is not efficient. Mass awareness of this wealth transfer is low, so confidence in paper currencies is still high, supporting their perceived value. Market intervention by central banks and other parties conspires to keep the prices of precious metals artificially low and suspect.

This maintains an arbitrage for individuals to buy gold and silver at a discount to true value, which James believes will be slowly realized in full over the next several years as the bull market in precious metals approaches its third and final phase.

A factor in this rise will be the increasing fragmentation of coordination among the central banks. Increasingly, central banks outside the influence of the U.S. Federal Reserve are treating the precious metals as true money, and becoming net buyers of bullion for their reserves.

Ultimately, Turk predicts the price of gold will move to somewhere between $8,000-10,000/oz and that we'll see even higher price appreciation in silver.
James Turk: Central Banks are Losing the War to Suppress Gold & Silver Prices
 by Chris Martenson

My guess is that 2013 and 2014 are going to be big up year for the precious metals, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher.

So predicts James Turk, founder and Chairman of GoldMoney.com.

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income. What it is, is money. Its function is to store wealth.

But money, like investments, can be overvalued or undervalued. And what we’re witnessing on the world stage is a gross mispricing of money as central banks engage in depreciation of their fiat currencies via inflation (i.e., money printing).

The process causes a transfer of wealth from those holding overvalued money to those who hold undervalued money. That’s what’s been going on for the past decade as the price of gold has steadily marched upwards versus fiat currencies.

But this process is not efficient. Mass awareness of this wealth transfer is low, so confidence in paper currencies is still high, supporting their perceived value. Market intervention by central banks and other parties conspires to keep the prices of precious metals artificially low and suspect.

This maintains an arbitrage for individuals to buy gold and silver at a discount to true value, which James believes will be slowly realized in full over the next several years as the bull market in precious metals approaches its third and final phase.

A factor in this rise will be the increasing fragmentation of coordination among the central banks. Increasingly, central banks outside the influence of the U.S. Federal Reserve are treating the precious metals as true money, and becoming net buyers of bullion for their reserves.

Ultimately, Turk predicts the price of gold will move to somewhere between $8,000-10,000/oz and that we'll see even higher price appreciation in silver.
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