Dr Peter G Kinesa : Marc Faber Blog: JAPAN Another Nauru? -The Japanes...

Dr Peter G Kinesa : Marc Faber Blog: JAPAN Another Nauru? -The Japanes...: Marc Faber Blog: JAPAN Another Nauru? -The Japanese Stocks made a generational low in 2012 and won't go below that To begin with, no...

While the dark economic picture for Japan is clear, the investment picture for the coming months remains murky. Stock markets entertain emotional issues or over-dramatize the slightest nuance and make them a game-changer. Save for trading opportunities, the risks of investing in anything Japanese are considerable. The potential for a sharp decline in asset values when interest rates rise is too much to stomach. Add in the growing physical constraints this nation faces further dampening economic activity puts Japan at the top of our short list.

When you think about it, here's a nation that has been struggling for twenty years for an economic solution - and still with no solid answers to its woes in sight. In all likelihood there are none. So make your money taking this puppy from the penthouse to the doghouse. Bow! Wow!

First Financial Insights
June 15, 2013

From the penthouse to the...

SCARCITY - Humanity's Final Chapter

Scarcity 

 Humanity’s Final Chapter*

     "Diminishing Returns"          

CLICK HERE

Diminishing Returns – harbinger of humanity’s final chapter

The “law” of diminishing marginal returns applies to successive investments in

nonrenewable natural resource (NNR) exploitation… 

Click here for full article


Comments: "Diminishing Returns"  

January 6, 2013

Dear Chris,

Thanks so much for your most recent article.  As always, excellent work.

Here are a few of my humble observations and thoughts, adding further despondency to the whole situation. 

Aggregating all NNRs from a planetary perspective, thereby creating a single theoretical planetary NNR unit to your lessons, should help clearly convey our grave circumstances, thusly causing even deeper concern amoung readers.

Following from the above, one could point out that it is our traditional economic theory that drove us into this abyss. And it still fails to acknowledge or understand the realities we now face in terms of certain economic collapse, particularly as NNRs diminishing returns will tie directly to the dilution and collapse of all currencies. Few will understand, it seems, until it is much to late, that this is the true and primary cause of ALL Fiscal Cliffs - not our politicians, for sure.

The diminishing returns from the planetary NNR unit are also dramatically accelerated by population growth, climate change and other related concerns. Throw into this mix, the demise of the supporting social, economic and political frameworks, then the dark outcomes of diminishing returns gets much deeper.

So, the only question to ponder now is: Where do we stand? And based on the projected extraction and consumption growth of the global NNR units, all other things being equal;   

HOW MUCH LONGER DO WE HAVE; EVEN ON A BEST CASE BASIS? 

Sincerely,

Terrance A McNeil

CEO and Founder

First Financial Insights Inc

Where have all the fish gone?

*William R. Catton Jr. Comments: 

Scarcity - Humanity's Final Chapter

 by Christopher O. Clugston 

Foreword by William R. Catton Jr. (Author of “Overshoot”)

“Chris Clugston has pulled together such an array of facts about the path ravenous humanity has trod and the consequences we now confront that no person who fails to read this book should be eligible for election to high office.” – William R. Catton Jr.

Scarcity is a book about humanity’s “predicament”, which can be summarized as follows: the natural resource utilization behavior that enables our current “success”—our industrialized “American” way of life—and which is essential to perpetuating our success, is simultaneously undermining our very existence as a species.

Our industrial lifestyle paradigm is enabled by enormous quantities of nonrenewable natural resources (NNRs)—i.e., the fossil fuels, metals, and nonmetallic minerals that serve as the raw material inputs to our industrialized economies, as the building blocks that comprise our industrialized infrastructure and support systems, and as the primary energy sources that power our industrialized societies.

Ironically, since the inception of our industrial revolution over 200 years ago, we have been eliminating—persistently and increasingly—the finite and non-replenishing NNRs upon which our industrialized way of life and our very existence depend. As a result, most of the earth’s NNRs have become permanently scarce—i.e., there are not enough globally available, economically viable NNR supplies to completely address humanity’s global NNR requirements going forward.

Based upon analyses derived from US Geological Survey (USGS) and US Energy Information Administration (EIA) data pertaining to domestic (US) and global NNR demand, supply, pricing, and utilization; Scarcity provides compelling, if not irrefutable, evidence to support this assertion; in addition to enumerating the causes, implications, and consequences associated with our predicament.

Scarcity is essential reading for those who correctly perceive that the world, especially the industrialized “Western” world, is in a state of decline—decline that cannot possibly be reversed by our incessant barrage of misguided economic and political “fixes”. Scarcity will enable you to make sense of a world that is experiencing the most profound paradigm shift in human history.

NNR scarcity is the most daunting challenge ever to confront humanity. If we Homo sapiens are truly an exceptional species, now is the time to prove it.

"Scarcity is an impressive analysis of our present predicament. Far too many influential people are attempting to address that predicament with flagrantly misconceived notions about it, and most of what nations and their leaders are trying to do about today's troubles remains counterproductive. This you know, and you show it crisply and emphatically.” – William R. Catton Jr.

Note: For those who are unfamiliar with William Catton, he published the seminal work on humanity’s “predicament”, entitled "Overshoot", in 1982. If you have not yet read "Overshoot", I strongly encourage you to do so; it is arguably the most important book written in the 20th century.

TOP TEN INTERNATIONAL FINANCE AND ECONOMIC BLOGS

TOP TEN INTERNATIONAL FINANCE AND ECONOMIC BLOGS

"journeying to co-existing realities"

Less than two years ago we started this blog with the view to bringing forward a new economic thesis based on the existential realities of human enterprise.  This thesis, put simply, declares that economics  must embrace science; and most particularly the hard constraints of physics and exponential mathematics, if  it is to be useful to serving  purposes related  to human-existence's  longevity on this planet. Moreover, that the operative neo-classical thesis with its pervasive bias towards unbridled growth, is not only physically and mathematically insane - it leads and promotes the premature extinction of our species.  

From a trickle of a just few hundred page-views a month, we have grown to thousands of visitors monthly from all parts of the world. Our reach has been diverse and popular in countries such as; Russia, India, Germany, Sweden, Netherlands, Israel, Switzerland, France, United Kingdom and many more. Why? First, around the world there is an intuitive concern that the growing economic maladies are no longer possible to resolve using the beliefs and devices of conventional economics. Our global systems are stressed by overpopulation, climatic chaos, bio-diversity abuses, and looming shortages of the elements critical to on-going human enterprise. For the most part, conventional economics ignores these concerns and waits for an "invisible hand" to provide its mystical cures. We believe this approach is foolish and utter nonsense.

Second, we have integrated and included the thoughts and works of others who also recognize  and  deeply understand the critical nature of the crossroad that we now face. Special thanks goes to Al Bartlett, Chris Clugston, Dave Gardner, Tim Miller, Fred Palme, Steve Salmony, Jack Albert and Brian Bloom, who amoung many others, have made contributions to these efforts in a variety of ways. To all, we express our warmest gratitude. 

Thirdly, we aimed to use as many technically available ways and means of communicating to readers, viewers and listeners, in order to provide a richer and more credible experience. Study regarding Nauru, is a good example of going beyond the written word,  with actual photography and videos to substantiate facts, analysis, reasoning and conclusions. Through-out light touches of humour and juxtaposition were added for perspective, fun and entertainment  .  

To-date we have published nearly two hundred posts on both of our sites. Some have been popular for their content, others for their investment views, and still others for their  entertainment value. At times, posts generate surprising traffic volumes. 

We recognize that when you arrive at a site, you don't have the time to run through its archives to find the best or relevant pieces. So, to help in this regard, we put together this list of top posts from the past two years, based on content, theme and popularity. This was actually a much more difficult task than expected, as a number of our favourite posts are not included. Oh well, perhaps next year.

Without further dithering here's our list. Hoping you find it helpful and a valauble basis for considering this final thought about overpopulation, unbridled economic growth, and its consequences. "All other things being equal, if we reduce  our human population from seven to one billion, we would then in theory, mathematically extend its expected existence or longevity by seven fold. 

What should we do? What would the Doctor order? 

First Financial Insights
March 15, 2013

CLICK TITLE OR IMAGE FOR LINK

#1     

THE WEALTH OF PLANETS

#2

 Quantum Realonomics

#3

 Human Longevity or Unbridled Growth - The Fog of Economics

#4

Scarcity 

 Humanity’s Final 

Chapter

#5

Invisible Genocide; Fallacy of Economic Growth

#6

The Short History of Progress...NAURU

#7 

ALL  ECONOMISTS ARE WRONG – 

DEAD WRONG!

#8

The Keystone XL Pipeline Causes NO Environmental Problems???

#9

Existentialist Economics

#10

THE BIG MAMA OF ALL CREDIT CRUNCHES

Nouriel Roubini, Jim Rogers, Niall Ferguson, #Eurocrisis

Investors' Insights:

Week Ended April 6, 2013

FIRST FINANCIAL INSIGHTS

"Investors' Insights"

Nouriel Roubini Blog: Video: Market Outlook: THU 04 APR 13 | 03:45 PM ET: Nouriel Roubini, Roubini Global Economics, discusses China and Japan, and explains whether he sti...

After a while these television economists start to sound so programmed with their rhetoric the words start to blend together and sound phonetically like blah, blah, blah. The accent does spice it a bit though. And most of what is being said is trade oriented and short-term focused - less than two years. Not surprisingly, there is little reference to Cyprus and the complete boon-dongle this was for the EU. No mention made of what could happen to EU bond markets and how that could spread to equities and bond markets around the world.That's shocking, as there is still global contagion potential here.

To be short, Nouriel's TV shows has entertainment value but offers very little to the serious long-term investor. If he could, or did offer such value; then he would not an economist. That's our read on it.

First Financial Insights

April 5, 2013

"TA-DA"

 

Thanks Folks...

Jim Rogers : I am making sure I don’t have too much money in any one specific bank account anywhere in the world

Jim it is not about the bank accounts, that's the easy one to figure out. You cannot short bank accounts. But, you can short currencies, bonds and a variety of financial intermediaries and their related securities. You got to have a sneaking suspicion that is where the bucks can be made. Maybe Jim will say something once he has his positions in place?

Where should we do our homework, anyways? Let me see there's the EU, Banks, Insurers, Italy, Spain, Portugal, etc, etc,

First Financial Insights

April 3, 2013

"and that's the long and short of it"

Niall Ferguson (Video)  : Post-American World a New Dark Age ?

Who knows? First, it is difficult to make any sort of comparison to the Roman Empire for a thousand reasons. Niall is right in stating, that it basically launched Europe into the Dark Ages with little impact on the rest of the planet. The British Empire has fallen with little impact on the state of global society, as there were others there to pick up the ball. So even, a substantive decline or fall of the American Empire is not of great concern to global society, as there are many in the wings ready to step in and provide a leading role on a combined or singular basis. The world will go on.

The bigger concern is the fall of the "global industrial-financial complex" that is not run by geographic political states, but a collection of multi-national entities operating without borders. It is an invisible political state that operates organically without the protocols that have defined geographic political states. It is the collective inertia, infrastructures and outputs of the business and economic community for our global village. It is a ghostly enigma, but nonetheless exists by virtue of long-standing practises and inter-connections that are entrenched among nations around the planet.

It has no flag, no symbols, no constitution, no formal codes and no figurehead as leader. It cannot  be attacked geographically or otherwise.Yet, as world leaders certainly come to understand, it is an entity that must be recognized and dealt with using practical diplomacy. It is topic reaching far beyond these comments.

The point being, it is when this "Invisible Empire" falls, then humanity as a whole would enters a Dark Age similar to regional historic periods. Triggers for this collapse, could come from breakdowns in global finance, international trade, bio-sphere devastation or the shortages of the physical ingredients required to keep a "global industrial-financial complex" running. Most likely, any of these cases or combinations, would lead to horrific global hostilities.

The next dark age may occur sooner than any of us expect, lasting longer than can be imagined. This planet is a small island in the universe, isolated from neighboring entities offering alternative possibilities for existence. And we have seen what happens to small isolated islands. 

Through-out  history empires rise and fall, there is little to believe that this one is any different - a sobering thought.

First Financial Insights

April 3, 2013

The  Invisible Empire?

Jim Rogers Blog - Cyprus Sets The Standard For Other Countries To Seize Bank Deposits In Future

Monarchs did this many times through-out history - not a new story really. What Jim did not emphasise is that Central Banks who can print their own fiat currencies are taxing away our savings, investments and wealth through this method of debasing indirect taxation. There are quietly confiscating your assets to bailout banks, pay excessive bonuses and cover-up many other misdeeds - none of us are the wiser.

Cyprus would have also taken this much quieter, sneakier path of stealing savings and wealth confiscation, but they had one problem. They were part of the EU - meaning they could not print their own currency. They were hence forced to directly tax deposits, which is more apparent and above-board. 

International Banks should learn from Canadian banks, who every year invent new programs and fees to tax and confiscate more of their depositors funds. Masters of semantics. linguistics and legalese, they have fooled everyone into believing in these disciplined annual thefts are legitimate. So far!  When the presidents of banks earn 50 times more than the country 's leader - you know where the crooks are working. Now we need police. 

Returning to Cyprus, EU and banks, these events are creating a global gloss of confidence and trust in the financial system that is justified - all these poor judgements will ultimately lead to global financial Bubblegeddon and then political upheaval. The Bond Vigilantes are going to get very rich, while the New York Times will be looking for a new OP-ED columnists. Say Jimmy, are you busy? 

First Financial Insights

April 2, 2013 

HELP WANTED - CENTRAL BANKERS

The New York Times; Paul Krugman - DEPRESSION, NOT ENDED

THE NEW YORK TIMES

Paul Krugman – Depression, Not Ended

Comments: April 5, 2013

Little doubt that this depression is not over, but a debatable point is when did it actually start? Second, when did it start for the average American worker? In other words, are there actually multiple economic cycles concurrently occurring in an economy, thus the general economic cycle and numbers may be meaningless to the vast majority of citizens. Possibly? Hmm.

For instance, arguments could be made that the average American has lived under depressed economic conditions since 1982. No way! Well, this is when the "real hourly wages" got stuck at $16 (St Louis FED); close to when the overseas jobs exodus also began. A strong case thus could be made that a large segment (a.k.a. Middle Class) of American Society has been living in a depression for more than 30 years. How did we miss this? Are we fooled by aggregate GDP numbers for the overall economy?

There's more. Using the price of oil and average hourly wages in 1971, (St. Louis FED), the nominal wage rose from $4 per to $20 today; a modest 5 fold increase. Meanwhile, oil prices have surged from $2, to close to $100 a barrel; a 50 fold increase - meaning that in 1971 an hour of work earned two barrels of oil. Today, workers have to work ten hours for these two barrels. Hence, both observations arguably support that the depression is not over - but when did it start? And when did it start, for whom?

Maybe this is why folks feel they are working harder and harder - For So Much Less!

First Financial Insights

April 5 , 2013

When did it start?

#Eurogroup #JimRogers #MarcFaber #China #Cyprus

Investors' Insights:

Week Ended March 30, 2013

FIRST FINANCIAL INSIGHTS

"Investors' Insights"

At This Moment: Chinese Banks Are Being Hammered, Real Estate in the Ultimate Crony Capitalist State is Ugly | AgainstCronyCapitalism.org

You cannot even imagine how highly levered these Chinese banks and real estate developers are:think Japan 1980's, then double or triple your values. Japan didn't even build "ghost cities" to sustain their facade, but their multiple skyscraper- design proposals also got ridiculous rocketing for the moon. Similarities are apparent, although China is far from being comparable in terms of accounting, legal, audit and related regulatory standards. Risks are thus much greater. 

The Chinese are also capitalist neophytes associating with all forms of thespians practising nepotism. Imagine.Terrible! And no doubt suffer from the same old bubble syndrome " this time it's different ". It isn't. Never is, as most market bubble economies have, sooner or later, paid dearly for their excesses.

So as they say, "the rest as is history." Or will be.

First Financial Insights

March 29, 2013 

Wizards of Leveraged Bubbles

"Neophytes, Thespians and Nepotism - Could you Imagine?"

Marc Faber : U.S. Markets Won't Go Up Much More

Yes, No or Maybe. While we would feel confident is saying that markets are pretty much stuck in a range because of real underlying downward pressures caused by both resource-population and mathematical interest rate constraints; anything can happen to push prices upwards for an extended period of time. Markets represent an aggregate collection of socio-pathic thinking and rarely conform to what might be called rational thought phenomena. 

The drivers of greed and fear are emotions that do not have carved in stone algebraic equations that determine outcomes. Still, they somehow, in strange ways, connect to "perceived rational thought" or what otherwise might be defined as powerful persuasions built on contextual logic. However, when any "perceived key assumption" behind such contextual logic changes - then all hell breaks loose.

So remember, today's markets were driven by the comforting abstracts of a liquidity that was poured into to them by 24-hour  fiat-currency printing; that many, seem to assume has no limits. It does. Some event, or series, or connected events, will trigger either interest rates to rise, or profits to fall dramatically. These are likely rational reasons; the irrational reasons behind the markets emotions and related changes are much more elusive.

The point being, while for the most part we agree with Marc; US markets could still rise another 30% from here, and stay there for some time, - not likely, but it is still a possibility we must keep in mind. Markets can be cruel mistresses. 

First Financial Insights

March 28, 2013

Market Alchemy:

Aggregate Emotional Algebra mixed with Collective Socio-Pathology

     

Dr Peter G Kinesa : JIM ROGERS BLOG - #Cyprus is Doomed: 

Jim Rogers BLOG : Cyprus is a real threat to the U.S. Everyone was asleep at the switch, in fact; many had a hard time finding the switc...

No doubt that Cyprus is in a heap of trouble with the collapse of its international banking model, but it's the integrity of the EU where the bigger concern lies. How did they ever think these National Banks would survive, when assets totalled more than six times the national GDP - what nobody fears or understands the consequences of leverage? That leads to the next question - how many more skeletons lurk around the EU's closet? 

What can be surmised is that capitalization ratios of 1:8 may not be sufficient to ensure liquidity when  Euro bonds go - No Bid! The ECB should be tabling bail-out plans now, to preserve confidence when the proverbial crap hits the fan - which is a foregone certitude at some point. There is some big money to be made shorting these puppies. How long are you on Spain? Italy? Portugal? And their respective financial institutions - a little homework here has BIG profit potential.

Observe that the Cyprus contagion has also poured into Egypt as well. There are more coming as food and fuel shortages plague the world. Importantly, oil prices are not being depressed, which is a very bad sign, suggesting supply may be a bigger concern than demand. Hmm...Peak Oil? And gold, is just lingering, perhaps as Central Banks dump reserves to buy food and fuel; defraying political upheaval to a future date. There are known unknown reasons for these pricing events.

The big issues: Who and What is next when?

First Financial Insights 

March 27, 2013

So, Who's on First?

I don't know... 

After Cyprus, Euro Zone Will Slip Into Depression | 

Just so you know that we are not the only ones who logically link Cyprus to further troubles for the Euro zone, making their banks and securities a short-seller's paradise. More banking and government financing problems can be expected to ravage their economies. It is starting to make more sense to unravel this scheme, and let marginal countries devalue and print their own currencies so as to optimize their comparative advantages. This could revitalize their economies. 

Iceland was able to recover somewhat through devaluation, because it was not locked into another currency.

Where's Don Meredith when you need him? "Turn out the lights..."

First Financial Insights

March 26, 2013

"...the party's over"

Marc Faber: Endless Government Manipulation - McAlavany Interview

More of the same message, but it is amazing how quickly everyone forgets what the real issues are out there. It is always good to hear Marc spread the gospel, even though his focus comes from the neo-classical point of view. Moreover, he has a short to near term orientation, like many of today's investor/economists. By this, they rarely look at things beyond a ten-year time horizon. We do.

In fact, we believe going out 10, 25 or even a 100 years is essential and differentiates our thinking. Formulating such a long term look, gives us a bench mark that is proactive; allowing us to envisage the emerging patterns or templates quickly. For instance, Iceland, Ireland, Greece, Cyprus and others, support the template we see for many countries down the road, as they shift into a physical-economic resource destitution comparable to Nauru. And this is the global template that we envisage heading towards the longer term, as populations explode, while resources are completely exhausted.

So our investment conclusions, draw from the insights of the best short-term investors providing a more integrated view, when meshed with our far-off time-lines and emerging templates. And for that, we should all be the better..

First Financial Insights

March 25, 2013

In the long-term we are...

Dr Peter G Kinesa : JIM ROGERS BLOG - #Cyprus is Doomed

Dr Peter G Kinesa : JIM ROGERS BLOG - #Cyprus is Doomed: 

Jim Rogers BLOG : Cyprus is a real threat to the U.S. Everyone was asleep at the switch, in fact; many had a hard time finding the switc...

No doubt that Cyprus is in a heap of trouble with the collapse of its international banking model, but it's the integrity of the EU is where the bigger concern lies. How did they ever think these banks would survive when assets totalled more than six times the national GDP - what nobody fears or understands the consequences of leverage? That leads to the next question - how many more skeletons lurk around the EU's closet? 

What can be surmised is that capitalization ratios of 1:8 may not be sufficient to ensure liquidity when  Euro bonds go - No Bid! The ECB should be tabling bail-out plans now, to preserve confidence when the proverbial crap hits the fan - which is a foregone certitude at some point. There is some big money to be made shorting these puppies. How long are you on Spain? Italy? Portugal? And their respective financial institutions - a little homework here has BIG profit potential.

Observe that the Cyprus contagion has also poured into Egypt as well. There are more coming as food and fuel shortages plague the world. Importantly, oil prices are not being depressed, which is a very bad sign, suggesting supply may be a bigger concern than demand. Hmm...Peak Oil? And gold, is just lingering, perhaps as Central Banks dump reserves to buy food and fuel; defraying political upheaval to a future date. There are known unknown reasons for these pricing events.

The big issues: Who and What is next when?

INVESTORS' INSIGHTS
First Financial Insights 
March 27, 2013

So, Who's on First?

I don't know... 

Dr Peter G Kinesa : Al Jazeera English: #Cyprus bailout talks 'at very...

Dr Peter G Kinesa : Al Jazeera English: #Cyprus bailout talks 'at very...:

Cyprus bailout talks 'at very delicate stage' -  Al Jazeera English Who has been the primary beneficiary of the Euro, ECB and EU?...

We wholeheartedly agree with the good Doctor diagnosis, analysis and conclusive reasoning and also say its time for " For Let's Make a New Deal " or else many countries are a risk of just falling off the edge of the planet. Not going to be pretty. Nor would events be containable. 

So, whether its Bob Barker, Donald Trump or King Tu Tu this scheme is finished and its time to move on. 

First Financial Insights
March 24, 2013

The DEAL MAKER: NEW Head of ECB

Oh, by the way - You're FIRED!

#Cyprus, #JimRogers, #Russia, #WallStreetJournal

Investors' Insights:

Week Ending March 23, 2013

FIRST FINANCIAL INSIGHTS

"Investors' Insights"

“NEWS ALERT ”

Russia Rebuffs Cyprus Bailout

Click Above for today's Globe and Mail Article

This is getting to be worse than the Wild,Wild West or the Lehman Bros. fiasco of 2008. Where was the EU and ECB oversight in the first place? Does the ECB, EU and IMF not have any regulatory metrics in place to detect or prevent such issues from ever reaching this stage?. Granted Cyprus is less than .2% of the EU's GDP, but still, could you imagine the US not bailing out Rhode Island? Or Canda PEI? The message would be clear: "there is no political union nor governing Central Bank". 

This is the absolute wrong message for the EU and ECB to be sending ,when they will be facing crisis after crisis in the months ahead. Bond markets should be shrivering, as these new frontiers are openiing unknown, unknowns with the potential to dominoe into the global system. Trigering the much feared rise in interest rates around the world.

Whatever bailout funds Cyprus had expected it needed, is now sure to be much larger as every depositor with a heart beat will be looking to withdraw their funds as soon as possible. Some sources say the Russians have as much as $65 billion on deposit, that they could be wanting to pull out the moment the bank doors open.on Tuesday. This could therefore get much uglier.

Is it the beginning of the end for the whole EU experiment? It does not look promising.

Investors' Insights

First Financial Insights

Comments

The Globe and Mail

Toronto, ON
March 22, 2013

Unknown, Unknowns

Jim Rogers Blog :  Soaring Dow a Poor Indicator

Jimmy says it all in this television interview. Worth listening to his comments for five minutes. Right now, the stock markets are enjoying a "trillion dollar money printing party" that is creating loads of liquidity to keep the stock soaring fervour alive. It will not last forever. And as Jim says, when the printing stops and they turn out the lights - it will be very bad for everyone. Very Bad.

Here's the kicker. There is not much difference between  the Cyprus deposit tax and the debasement or dilution of wealth created by the printing of money.One approach is direct, while the other is quieter and invisible. Nonetheless the effects are exactly the same; banksters get their pound of flesh.

Something to think about this weekend.

First Financial Insights

March 21, 2013

One way or another...

The Frager Factor: Thanks to Russians and Chinese "Investor / Flippers" Making A Killing Again 

Not often do we comment on Real Estate, but it still remains one our favoured investment strategies against stock, bond, economic, political and currency risks. The Miami boom has been underway pretty much since the 2008 meltdown, when prices plummeted to 30 to 40% of construction costs on a per square foot basis. Buyers from all over the world flocked to the market cherry picking properties with cash or foreign credit, as the US banks were basically shut down, thereby limiting access to US buyers. Talk about shooting fish in a barrel.

Anyway the best of the bargains are pretty much done in Miami, but Real Estate still offers a long-term hedge against sovereign political, economic and currency risk. For instance, would you hold on to  your $10 million (Cdn) Villa in Spain, Greece, Cyrus or Italy; or rather own a $5 million dollar Chalet in Whistler, BC and a $5 million residence Australia? Why? The relative value of these two currencies should increase dramatically as global resources dwindle and the currencies of resource poor nations decline with their gloomy economic prospects.

Adam Smith recognized that the value of real estate is a function of the surrounding economic activity, infrastructures and prospects. Currency values embed this idea and thus sticking to nations with the higher ratio of resources (hard assets) per capita offer better long-term protection of your global purchasing power. The intrinsic hard-asset wealth ratio, is also a better metric and is more important than GDP - because you achieve comfort regarding sustainable economic activity.

While unique opportunities come and go, proper long-term positioning of realty portfolios should always remain foremost in mind. Even positioning as alternatives to stocks, bonds and precious metals needs to be considered. So determining the long-run geo-economic prospects is absolutely essential to sound investing. 

First Financial Insights
March 20, 2013

Visit My New $10M Villa in Cyprus

   

“NEWS ALERT MARKET WARNING”

Cyprus Rejects Deposit Tax
Click Above for today's Wall Street Journal Article

No one voted for what could have been the most devastating economic policy action in over a hundred years anywhere. Wall Street Journal's article sets out further details and is linked above. With the rejection of this plan the country still faces major hurdles in order to avoid bankruptcy - whether a deal can be cut with the Russians remains uncertain. We are consequently withdrawing our stern "Market Warning", but will continue to keep an eye on events, particularly if Cyprus is the first nation to be forced from the EU due to its financial and economic mismangement.

First Financial Insights

March 19, 2013

EU Policy-Makers Look To Future of Cyprus

"Guys, that's not Cyprus! Oh, I get it - another Nauru?" 

“MARKET WARNING”

What if your bank shut down, then gave 10% of your (and everyone’s) money to the government? This just happened in Cyprus.

Click Above

This deposit seizure is a very serious matter and  policy event that has far-reaching economic and investment implications on a number of fronts; as it sets a dangerous precedent for banks, brokerages, pensions, insurance companies and all other forms and shapes of financial concerns around the world. What happened in Cyprus, could it also occur anywhere in the world - as desperate governments are forced to take harsh illegal actions that violate all forms of commercial law, regulation, ethics and fair economic principles? Who can answer this question now?

Cyprus opens the door to a jackpot of issues that occurs when governments legitimize the outright theft of deposits and assets from bank accounts within their jurisdictions. This is theft of the worst form. For it undercuts the " Rule of International Law " and thereby all confidence in engaging in financial transactions with international bodies or their banking agents. Should this "illegitimate tactic" spread to other European jurisdictions, then the whole financial system could collapse in just a few days, as a panic moves from country to country - and therein; bank to bank. 

Let's remember too, that Cyprus is not a third world country under the control of a socio-pathic despot. Its actions appear to have the tacit approval of the EU and ECB. The implications of which place the whole European banking, brokerage and commercial system in "grave jeopardy"  - leading to a possible collapse in EU financial markets and systems due to fears of more deposit seizures.  

The amount, extent, and rippling effects of the theft of banking deposits or assets by any government is so devastating that immediate measures, sanctions and condemnations must come forward from all world governments, financial institutions and regulatory bodies. Or else we risk seeing the beginning of a wide-spread fear that has the potential to snowball out of control. 

Why? Because the question everyone will be asking is: Who's next? Italy? Spain? Greece? Ireland? Portugal? Savvy investors, banks, funds and institutions are sure to start readjusting their positions next week (many did over the weekend no doubt) before the markets open Monday and banks in Cyprus reopen on Thursday. We, hence, expect major outflows and realignments of capital out of marginal EU nations should no counter-measures be applied.

What Cyprus has done is completely unacceptable and thus harsh measures are needed to correct this violation or else the whole global financial system risks a collapse. The problem is that even if measures are taken to fix this immediately; it has created a "whole new fear or risk" in the minds of investors regarding the safety of funds in banks and institutions in Europe, - or perhaps everywhere. This is the last type of policy action one could imagine in such a fragile economic environment. Markets are sure to respond with deep concern.

This is potentially far worse than the crisis that was caused by the Lehman Bros fiasco and we have consequently issued a Market Warning to all our clients, readers and followers for this week. Of course, we will be following and commenting on events as they unfold.

   

So, we too say, "Be careful out there" 



INVESTORS' INSIGHTS
First Financial Insights
March 17, 2013 

GAME CHANGER - 

When Integrity is Lost