Tuesday, February 27, 2007

OK...now what?

if you are in the markets and you want a way to play a total route, take a look at QID.

warning!!!: QID is twice as volatile as the QQQQ but in REVERSE. In other words, it is twice as volatile, in both directions.

I still fully expect the fed to try to inflate there way out of this mess....So, be aware and have some exposure to something that rises in an inflationary environment if you're trying to short.

more later,

Sunday, February 25, 2007

Tobin ignores the first law of Drug dealing....

...."don't get high on your own supply!"

Or, at least that's what I think Michelle Pfeiffer tells Tony Montana in the cult classic....

Regarding Tobin: "I neva' li' tha' cockarocha"

But, in the interest of fairness, I wanted to print his story. in my blog because after reading his article, I looked up definition of "doom and gloomer" in the dictionary and there was a picture of fuBarrio :)

In the end I couldn't help adding a few of my own snide comments interspersed throughout.

From this link: http://changewave.com/freecontent/2007/02/freetobymain20070221.html

"I want to thank Britney Spears and Isaiah Washington for being the inspirations behind my rant today. Poor Britney, God bless her, checked into rehab on Tuesday -- I hear she's out now. That didn't take long.

"Grey's Anatomy" actor Isaiah Washington had to go to rehab because he said some unkind things about gay people.If you ask me, I think we're keeping this rehab thing too small -- it should be a lot bigger. And I think the first new rehab program should be for the bad news bears and perma-doom-and-gloomers -- and I volunteer to run it.

These are the guys that we see forecasting disaster on television every day -- we have them on Fox News Channel and you can see them on CNBC, too (fubarrio edit: CNBC is too doom and gloom??? hahhahahahhahaha, er, cough cough...ah....ok, back to tobin). They make good TV and you know why they're on -- because they scare the crap out of people.

Here's their basic line: These sub-prime mortgages are going to blow up and when they blow up they're going to take the entire U.S. economy with them. It's going to be a recession just like 1989 or 1990.And that's why they're bearish. They'll tell anyone who listens that -- oh my God! -- you've got to sell your stocks, you need to buy gold and you need to buy all sorts of crazy things.

Listen, these guys need to be in rehab to get reacquainted with modern economics. In essence, they're telling a story as if nothing in the world has changed since the '80s. (fubarrio edit: "it's different this time"...uh....yeah.) And let me tell you, in terms of financial terms, in terms of global financial economy, in terms of how we spread risk around the rest of the world, everything has changed. Everything.

So to come to the same conclusion that something that happened in the late '80s is going to cause the same thing to happen in 2007 is insane. It is so far off the mark.


Let's go through this sub-prime blowup thing. In the old days, if we went out and we lent a bunch of money out to people who are less than creditworthy, and maybe we gave them 100% loans or maybe 110% loans. In the old days (what I'm calling the '80s now) this happened. And guess what? If interest rates started going up, or the economy really slowed down, you'd get a high default rate.And that would be somewhat of a contagion because maybe at that time a lot of those loans were made by savings and loans that had no insurance and there was no way or securitizing via credit derivatives.

Let's fast forward to 2007. Today, we've got a whole bunch of guys making these sub-prime loans to low credit people or with low documentation loans and pretty much everyone could get approved. Now some of these questionable practices are coming home to roost because they were adjustable-rate loans. And as interest rates rose over the last couple of years, they now have a 7% and 8% rate instead of a 5% rate.

But guess what? This is not going to take down our entire economy. As a matter of fact, it's not even taking down the mortgage industry. Here's what it's doing: First off, the companies that bought or made these loans, packaged them together and sold them off in pieces in what's known as trusts. Now these trusts were purchased by millions of investors out there through their money managers, hedge funds or corporate bond funds.But instead of just buying these things, they also are buying what's known as credit derivatives (i.e., insurance), particularly on the hedge fund side. So if the loans blow up, they've already bought insurance. (fubarrio edit: to readers...google "counterparty risk" if you want my rebuttal).

When they bought these high-yielding loans, they paid for that insurance all up front. That wasn't available in the '80s. So the idea that if these loans go bad that means the rest of the world is going to go bad is nuts. It's nuts because these loans have been split up and sold to literally millions of different investment pools all over the world, not just in the United States. So when you spread the risk like that, it completely changes the risk parameters.


Here's the second thing that the doom-and-gloomers don't understand: We have a $13 trillion economy that's almost $14 trillion if you add everything up including imports/exports and the whole schmozzle. So at that level, a $200 billion meltdown in mortgages doesn't get on the radar screen of our economy. We are a gigantic aircraft carrier powered by the incredible buying power of the American consumer, the incredible productivity of the American corporation.$200 billion hiccups just don't get it anymore.I mean, 15 to 20 years ago it was a different story. But these guys, these professional doom and gloomers in my personal economic rehab program, are going to learn how the world is different today.

1) Because of global capital, we have this tremendous diffusion of investment capital from all over the world in these various investments, so they're spread out. No one country or single place is going to take a hit if they have problems.

2) When they do have problems we have a huge, multi-trillion dollar credit derivative industry, which is a fancy phrase for people who buy insurance when they purchase these riskier assets. They've already insured most of this.

3) If you look at where the defaults are coming in this sub-prime market, you'll find out that a lot of the defaults are coming from speculators in places like Miami. So I think these people bought these condos probably on the day we said the real estate market is at the top in March 2005. That was the day when we saw facing full-page ads in every major newspaper in the United States saying, "make $50,000 every 90 days."

That was the top, ladies and gentlemen. We called it, and we were right. But guess what? A lot of people didn't see our warning and went out and bought condos at the top of the market and got an adjustable-rate mortgage.

So when the thing scooted up in two years or a year and a half, they said, "Forget it. That condo's going away, I'm giving it back to the bank." Or they bought a house because residential real estate "can't fail." Well guess what? They're giving it back, too.

Now these people are not bankrupt. I mean there are certainly people at the low end of the economic scale who have a mortgage that's too big and they give them to the bank in foreclosures because they can't make the payments.

Guess what folks? That's how the mortgage market works. But the thing these guys are missing is that this is just the speculation being pulled out of the market. We've got an unemployment rate of 4.7%. We'll probably top out in this cycle at 4.9%, maybe 5%.


Here's one more thing people don't understand about this economy. We have what I would call the super spenders -- the top 10%-20% earners in the United States. This group accounts for almost 90% of our economic activity when you talk about anything related to discretionary spending.We're talking about spending on a second home, new TVs, putting the kids through college, etc.

If you study that group -- people over the age of 30 with some college -- the unemployment rate is about 1%.And the fact of the matter is that at the low end of economic spectrum, if they're having financial difficulty because their mortgage rates have gone up to the point where they can't make them, I mean, you know, as dreadful and heartbreaking a story as that is, from a pure economic standpoint, it really doesn't matter as much to the overall economy (fubarrio edit: yeah....90% of the population feeling disaffected will probably HELP political and economic stability....kinda like new serfdom...damn...why didn't i see it before?)

So what you really want to worry about in 2007 is how the super spenders are doing in the American economy. And if you look at those numbers, you'll see they're doing great, and that's why this economy continues to grow and continues to have this soft lading -- and is getting ready to rebound again.

So if you add all those points together, you'll see a brighter future. That's what I'm going to teach in the doom-and-gloomer rehab.We'll even take Britney Spears -- though I don't know if we can get her to last for more than a day.But I really think there's a group of doom and gloomers out there that need to come to my rehab center and get adjusted to current reality in the global economy, and not keep overlaying what happened in 1985 and making that comparison.

From an economic standpoint, that argument really doesn't hold water.Remember, we also have about 2 billion more consumers in the world than we had at that time. Thank you, China. Thank you, Russia. Thank you, India.We have a huge amount of capital -- I mean the world is literally twice, almost three times as wealthy as it was then (fubarrio edit: oh yeah, brilliant....thank you Bank of Japan, thank you Federal Reserve). And we are just so much bigger, so much more powerful, so much more insulated from these specific shocks, that we just don't have that down risk. And that reality has really not been priced into stocks because I think when people understand how much safer from an economic standpoint this overall global economy is, they'll probably do one thing -- and that's price stocks even higher.

So, doom and gloomers, there's plenty of room in my rehab program. You guys are out of touch with reality, and you can use my help."

Holy cr@p. I could say so much. Suffice it to say, I disagree. But he's the one with the show on the "fair and balanced" network, so.....who's laughing?

Ciao for now,

"You're so 'money'...and you don't even know it"

OK...a blog entry about Uruguay. (gasp!)

One of the (first) interesting things that a newcomer notices when they arrive in Montevideo are the horsedrawn garbage carts doing battle with peugots, fiats, citroen's, city buses and large trucks in downtown city traffic.

My first evening in Montevideo, staying at a hotel on one of the busier commercial streets around 2 am I was woken up by the sound of clipping hooves on the pavement. Even as jaded as I am, it's hard not to smile when a horse trots by with a garbage cart stacked to the hilt -- looking a little bit like the grinch that stole christmas' overloaded sled.

Now, it turns out that these men are unfortunately jobless, and they dig through the dumpsters (dumpster dive) in order to find things to sell/recycle and are not part of the regular automated trucks which empty the dumpsters on a regular basis.

Almost invariably, *anyone* who has ever lived *anywhere* will wonder (usually outloud) why there isn't anyone given horsedrawn carriage rides for tourists. Now, certainly, Montevideo is not NYC, but during the summer months, the city is fairly overrun with tourists. I can't help but think that a couple of horsedrawn carriages could give *really* economical rides to a few tourists around a couple of strategically located neighborhoods and *clean up*.

There is obviously an ample supply of these horses (although i have yet to have anyone give me more than a guess as to where the homeless people get them or exactly how it works).

The Uruguayos are in general "ashamed" of the situation. I think their (generally) left leaning political beliefs see it as a failing of society. Since the left leaning politicians just recently retook power, horse drawn garbage carts could be one of those things that disappears from the streets of Montevideo.

Why in the world can't anyone here think even a little bit outside the box?

For all the conformity that gets driven into the skulls of Asians, I found all parts of Asia to have people who were *much* more enterprising than Uruguay.....Even communist *Beijing* two years after the Tiananmen square uprising...

I've actually heard younger Montevideans complain about the same thing. They say as soon as one person does something and it's successful, overnight you'll have 20 more.

The theories trying to explain this strange behaviour are multi and varied.

.....I've heard theories that they are "overeducated"/institutionalized.

Now, for me, I don't care. I find the slower pace of life, which i equate to Europe in the 1950's, quite charming, and frankly don't want to live in LA jr. or "the next Shanghai". However, most of the Uruguayos (especially the young ones) are NOT happy with the economic opportunities available them in the country. The foreigner with an imagination comes here and sees things as being "wide open". Meanwhile the local with commercial intiative and drive too often leaves the country to find opportunity elsewhere.

Hopefully (maybe) the Uruguayan inferiority complex is starting to recede a bit. For the first four or five months I was here I must have heard, "tell me fuBarrio *why* did you pick *Uruguay*?" (as a place to live). The intonation of this question was generally worded so that it could be interpreted as "why (in the world) did you pick uruguay (of all places. are you, like, a crazy person or something?)".....Since none of them had ever seen this blog, there was still some question as to my sanity.

By next tourist season, I'm going to convince (fund if necessary) one of these enterprising unemployed young people to get a couple carriages offering rides to tourists around the shoreline, the old city, parque rodo, a couple of the touristy neighborhoods or other parks....not like there is any shortage of people skilled at maneuvering horsedrawn carts through city streets....

The reason I'm letting the "cat out of the bag" and willing to lose my first mover advantage by posting here, is that I'm hoping someone else gets with the program and does it before me so I can focus on more important matters -- like finding a direct importer of twinky hostess snack cakes!!!


Saturday, February 24, 2007

The American Dream of "Loan Ownership"

--Isn't it interesting how someone who owes the bank is called a "home owner"?

I had a particularly insightful friend who owned a very nice home in one of San Francisco's more desirable neighborhoods. Back in 2000, when asked if he owned his home, he used to answer, "No, I pay the bank for the right to maintain it for them."


So, while I've been away from the Internet I haven't been reading nearly as many conspiracy kook websites. Unfortunately, I didn't have cable tv either, so I wasn't I wasn't able to self-medicate away the voices in my head with a weekend marathon of"What's Happening?" reruns.

"So what are the voices saying, fuBarrio?"

They are saying that the unraveling that we've been predicting is underway.

"So why don't I see it fuBarrio?"

The answer is, because it's only just getting underway. Although the financial conditions that made this such a foregone conclusion have been in place for YEARS, the turn is only just now at hand.

"But, your predictions have been off in the past. Why should anyone listen to your paranoia now?"

Because this time the sky really is falling!!! :)

The reason that it isn't obvious to you yet is probably because of where you receive your information. As a public service to the three readers who read this blog now, I use the time afforded to me by my unemployment and partial disability settlement to bring you the BEST of all the and conspiracy nuts' information....kind of like a reader's digest of the universe of the "6 B's" crowd (bunkers-beans-bullets-bandaids-bottled water, and-bourbon).

"So what's going on that tells you the turn is at hand?"

Well for YEARS I've been scratching my head at the subprime mortgage market. Subprime, are the people who sell mortgages to Americans with bad credit ratings allowing them to get into overpriced stucco sh&t boxes.

For a lot of reasons, explained here previously, the subprime sellers of mortgages were involving themselves in the risky behaviour of putting people into loans that they knew the borrower had no chance of making good on.


Well, they weren't totally crazy. They made GREAT fees on these loans, and then packaged up the loans and resold them through "securitization" (big bundles) to larger institutions. The reasons these larger institutions would buy these dubious loans were that they were again packaged up and the risk was "hedged" away again....

....In fact, at this point, the risk has been packaged up and hedged away so many times that a good number of industry observers aren't even sure who exactly is holding the "bag" (so to speak) on these loans.

So why do I think it's starting to hit the fan? Well, subprime lending facilitators are starting to go out of business. As the lending standards tighten up on those most willing to lend to the most dubious it will create a series of chain reactions that will become a self-reinforcing cycle of falling asset prices and tightening credit.

At some point, if the tranches of higher quality paper get effected, the results could be catastrophic. The reason is, the higher quality paper is "geared" or leveraged in a much more aggressive way...The reason being that there is a much lower chance of default, theoretically.

I would opine in general that the people buying these securitized mortgage securities don't really have effective tools for evaluating the risk these securities are carrying with them. The smart ones, that do, have already hedged away the risk (theoretically) and taken a piece of the return in exchange for doing so.

In the end, if it ends badly enough, it will be shocking to everyone how many supposedly "safe" parking places for money were gearing in this low interest rate environment to increase returns on fixed asset pools and exposing themselves to joe-six-packs willingness and ability to continue paying increasing payments on a house that is already underwater and losing value daily.

....better clear the calendars of the banking committee members in congress now while they practice their best finger wagging and looks of shocked indignation when this festering turd comes to the surface in a very public way.

If you want to read more about what is going on already with the widening of risk spreads in the subprime crap check out Russ Winters' blog here. http://wallstreetexaminer.com/blogs/winter/?p=456


p.s. if you're wondering how to protect yourself, you must be new here. in case you are the fourth reader of my blog, to save you some time in reading all my maniacal old posts, buy a little bit of gold to go with all that worthless paper you are saving for your "retirement". if you're really ballsy, buy a uranium miner's stock with resources in the ground in geo-politically secure area of the world

Yeah....uh.....What was I going to say?

So, after week on endless week of waiting, fuBarrio is once again unleashed on the world at large and free to post all his meaningless, mindnumbing walls of text.

Have you ever had something really important to say, and then foolishly waited for someone else to pause to inhale midsentence before interrupting?....and then forgot what it was that you wanted to say?

STOP THE PRESSES!!!! fubarrio has nothing to say...So, without further adieu, I give you Golden Lotus for today's post:

hello everyone golden lotus here!

i am so sorry i have not written in a long time. for those of you that i know besitos, for those that i dont know huggs.

okay since i have recently converted to the dark side (fubarrio edit: eating meat) , i have had the experience of getting ill and also not getting ill.

so for those that would like to purchase good meat in montevideo, i would suggest that you not buy your raw chicken, roasted chicken, or stuffed chicken at disco or devotto (fubarrio edit: grocery chains in montevideo)....or that chicken place called "c" something. it is not very clean and i'm not sure how long the chicken has been sitting on the counter.

so far, the meats that are pretty clean and fresh are at tienda (fubarrio edit: "tienda inglesa"). go there. i have not had the chance to go to geant, so i dont know about them. oh yeah, and be careful buying your seafood. seafood in the grocery stores is not very fresh (frozen) and i dont know how old the seafood is. you can not do the "sniff and scratch" test on the fish. so be careful...i have a fresh fish dude (monger i think is what he is called) and they have like a seafood resturant, id go there. if you want his info, just ask me.

and, dont get your chicken, fish, meat, and whatever type of meaty thing in the ferrias, unless you want to risk yucky, poopy, vomitty, and lose like 15 pounds a day.

i think that is why i am so skinny now...

that is all.



Wednesday, February 21, 2007

This just in!!!

fuBarrio is STILL without Internet in his house!


not exactly news, i know. i have some stuff to post, but can't just now.....i need the internet to do a *little bit* of fact checking before i spout off.

latest news is that i'm supposed to have a connection "manana". :) we'll see. until then, absolutely nothing has changed in my opinion about the markets (metals, energy, equity, real estate).

the trend is your friend.


Tuesday, February 13, 2007

80's Heavy Metal (shop)

A change of pace today.

No Uruguay. There will be no vague and cryptic trading advice. Just a story that popped into my mind after burning my finger last night from fuBarrio's childhood.

If you remember properly, fuBarrio is a Gen-X kid. Despite growing up with lots of "latchkey" friends, his home was not "broken", and his mother (for the era) was bordering on overprotective. Organized tackle football, motorcycles, and (gasp!) drivers licenses were the subjects of fierce battles in the fuBarrio liberation movement of 1969-1987....and not all of these battles were won by the freedom fighters.

That said, fuBarrio still attended public school. Many cultures have a "right of passage" where a boy moves into young adulthood around the age 11 or 12. Longview Washington had one of these as well. It was called "Monticello Middle School".

My own son is the same age now, and I can't imagine him being exposed to the same things. He doesn't live with me, but lives in my old home town, and understandably I was excited that he wouldn't be following in my footsteps to Monticello and instead attending the private school in the area.

Back then, things were really moving too fast for me to really take stock. But now, I can look back with a mixture of horror and amusement at the circus that was Monticello. While it's obvious that a bunch of adolescent kids can make for some interesting times...especially in the early 80's ("dazed and confused" time frame)....the things that really jump out at me as being bizarre were some of the adult "sanctioned" activities.

In fact, my humorous memory wasn't just from a sanctioned activity. It was a *requirement* for passing through the halls of Monticello as a young man. Mr Berglund's Metal Shop!

Mr Berglund had salt and pepper short cropped, slicked back hair and a small neatly trimmed moustache, and wire framed glasses. Nearly everything about Mr Berglund reminded one of a WWII era Nazi officer (at least as they were depicted to kids in the old movies)....every kid just knew he was in hiding and for some reason or another hadn't got the "memo" that he was supposed to go to South America.

Daring kids would snap out Nazi "seig heil" salutes behind his back....Often immediately after Mr Berglund had snapped off some some very directed orders.

Almost as if to mock us, Mr Berglund insisted on wearing a white labcoat/smock at all times. In retrospect, he was surely jutrying to protect his clothes from dirt and grime in the lab. However, coupled a with a young man's imagination, it made him appear as if he *was* some mad nazi scientist just emerging from an old school eugenics experiment -- science against nature in all its glory.

And, as par for the course (of course) Mr Berglund had a funny way of talking...a very "nasaly" quality, a speech impendiment perhaps, or an unplaceable accent. To this day I can't say "galvinized" without imitating his accent. But, keep in mind, a teacher the kids found strange would not an anecdote make. Mr Berglund was merely the ring leader of this circus.

Metal shop, a requirement for boys, if I remember correctly, was clearly some sort of throwback to America's heavy metal industrial past. A room with industrial height ceilings filled workbenches, benders/folders, lathes, grinders, acetyline torches, etc, with helpful warning posters strewn about warning the kids that improper use of any of the various and sundry peices of equipment could lead to loss of life and/or limb (literally).

Now, keep in mind, it wasn't just "willy nilly". Mr Berglund was very serious about safety and would generally show a Zabruder-esque quality film from 1950-something that demonstrated how to use one of these monstrosities without losing any of your 12 year old pink flesh in it. Then, Mr Berglund would do a quick "safety briefing" and demo of the equipment.

However, once the brief demo was over, kids were given a multitude of projects that involved demonstrating your capability on various tasks, self paced, and with only Mr Berglund to monitor a barrel of 30 monkeys in various parts of this large shop.

Imagine -- in one corner, two 11 year old kids in leather aprons and gloves pouring red hot molten aluminum into forms to create all manner of "forms" -- playboy bunnies, rolling stone lips, acdc album art, Copenhagen snuff logos, etc.

In another corner, a kid is sparking up the acetalyne torch to make a cut for his "table clamp". Another group are spot welding their "galvenized" sheet metal boxes. Meanwhile another group is sparking up an arc-welder (i sh*t you not) behind a screen to keep other kids from glancing over and scarring their retinas....but also keeping the one adult in the room from being able to actively observe to see if the kid is doing anything stupid.

As I said before Mr Berglund was serious about safety, and was quick to levy unusually large/stiff penalties for kids participating in what he perceived to be unsafe behaviour. The
reasons for this are obvious, but it had the side effect of leaving the more "minor" injuries unreported for fear of reprisals.

I specifically remember arc-welding for the first time -- unsupervised of course -- to fulfill one of the skills Mr Berglund's project was attempting to assess. Once done, he had been very clear that he wanted the kids to *remove* the heavy inflexible leather gloves, and raise the flash shield on the welding hood (obviously) before chipping off the "slag" -- left over, oxidized (i imagine) crap left on a weld after one is done.

Once this 11 year old chips off the slag, they should put the still *very* hot welded pieces into a bucket of cooling water until the steam stops erupting from the bucket.

I followed the earlier instructions and chipped off the blackened "slag" with my clunky gloves off....then, like an 11 year old, I laid the leather glove on top of the hot metal pieces and picked up the metal, using the glove like a chef would a baking pad to pick up a cookie sheet.

Of course, on the way to the bucket, my bare finger slipped past the edge of the glove and onto the metal, and luckily my reflexive drop landed the welded piece into the bucket. Of course, the incident went unreported and the rest of my day was spent pressing my blistered finger against the cold metal on the underside of my school desk framework in all my subsequent classes in an attempt to contain the mindnumbing pain.

To anyone over the age of 30, the description of Mr. Berglund and his metal shop probably doesn't sound all that strange....In fact, to some of you it probably sounds downright familiar! It only becomes interesting or amusing when juxtaposed with what is considered appropriate risk for children of the same age nowadays. I don't know what Monticello's educational requirements are now, but I'd be pretty suprised (even in an industrial town like Longview, WA) if it still exists in its past incarnation.

Delivering newspapers, mowing neighborhood lawns, and in some cases, even transporting themselves to and from school all seem to have gotten too "dangerous" or "inappropriate" for 11 and 12 year olds. The duty has fallen to Moms Dads, caretakers, nannies, and illegal aliens instead...Within that context, I have a hard time picturing the kids using the machine lathe in metal shop, unsupervised, to piece together intricate pipes and other assorted drug paraphenalia.....That said, if I get an alunimum cast, three-dimensional playboy bunny buffed to a mirror shine for father's day this year, I will stand corrected.


Monday, February 12, 2007

Barber, barber, shave a pig....

wow....gold is getting beat down in front of chinese new year!?!? what??? i'm *shocked*!

some info on retail investors moving to gold for the new year.

from the link: http://www.channelnewsasia.com/stories/eastasia/view/258096/1/.html

"SHANGHAI: Investment-grade gold bullions marking the "Year of the Pig" are getting an overwhelming response from investors in China. More than three tons of gold bars were sold out within a week.

Under no influence of the Midas touch, pigs in China are turning into gold, to satisfy a seemingly insatiable appetite for this chubby barnyard animal. Many believe the upcoming Lunar New Year is the Golden Pig Year. Falling only once every 60 years, it is one of the most auspicious periods of the Chinese zodiac, bringing the promise of wealth and fortune.

China, the world's third biggest gold buyer, is undoubtedly a gold loving nation. The Chinese perceive gold not only as a symbol of wealth and fortune, but also as a hedge against inflation. Combine this perennial love for gold with the arrival of the lucky Golden Pig Year and it is no wonder Chinese jewellers are now "squealing" with delight. But Chinese consumers are going beyond gold jewellery or ornaments - they are becoming keen and serious investors in gold.

China Gold Coin was the first jeweller in China to issue investment-grade gold bars in 2002. A Year of the Goat then, only 1.2 tonnes of gold bars were issued with prices hovering around 92 yuan or about US$11 a gram. The bullions were sold out within a week. Li Jian, Marketing Manager, Shanghai Gold Coin Investment Co. Ltd, said, "Everyone is saying it's the Year of the Golden Pig, so to meet this demand, we increased the issue to 3 tonnes this year. Sales were still overwhelming, it took only one week and everything was sold out."

The overwhelming popularity of these gold bars is due largely to a buy-back option. Buyers can cash the bullion in at any time, with buy-back prices based on gold prices in local and international markets. Gold prices have jumped more than 70 percent since the first batch of bars went on sale in 2002. Li Jian, Marketing Manager, Shanghai Gold Coin Investment Co. Ltd, said, "The ability to preserve its value is an important function of gold. We've set up several 'buy-back' outlets in the country, we sell but also buy back (the bullions); so it can become a kind of investment. "

The Chinese love gold, and since the set up of the Shanghai Gold Exchange, our market has gradually opened up; and so the demand for gold will probably grow even bigger." Gold is becoming a popular investment alternative in China amid the current sluggish property market and low bank deposit rates. - CNA/ms "

Tuesday, February 06, 2007

"Hammer TIme"

fuBarrio stirred momentarily this morning, at first thinking that possibly it was his head still pounding from an evening of libations at the Southron’s house cheering on Copperhead’s ill-fated Chicago Bears. But, that couldn’t be. The “big game” was Sunday and this was Tuesday morning.

While fuBarrio has been quick to praise Montevideo’s “dense” living….principally because of the benefits to having walkable neighborhoods and commercial centers. The price of such lofty platitudes are that when your upstairs “neighbor” decides to hammer out the tile, plaster, and pipes in their bathroom at 8am, rest assured the cinderblock acts as more of an amplifying noise medium than a barrier of any kind.

By 8:30 fuBarrio was wide awake, grumpy, and busily outlining his “manifesto”, browsing online for single room cabins deep in the Uruguayan interior, and packing a suitcase full of hoodys and ’74 Elvis shades. Unfortunately, after several attempts at Google, fuBarrio could find no way to implement the “mechanical Internet”, and started suspecting that going “off the grid” might have negative repercussions.

After several more searches he found a cookbook whose main ingredients tended to be wheatgrass, twigs, berries and tree-bark. Much to fuBarrio’s dismay however, after trying to master recipe #37, “sea-foam filled coral-sponge”, he started to lose hope for finding any kind of hostess Twinkies analogue in nature….Strike two.

The third strike came when the guy at the gun store told fuBarrio about some b.s. “7-day mandatory waiting period” for M-60 sales and .30 caliber ammunition in excess of 15k rounds would have to be back ordered…..Holy cow…move to the other side of the world and the wheels of whole JIT delivery systems start falling apart.

What was he going to do now?

A frazzled fuBarrio was chewing nervously on his back paw, cataract-encrusted eyes shifting nervously about. Around the time fuBarrio was looking for even more dangerous alternatives to a radical luddite existence, our landlord called and told us the construction on the upstairs bathroom would “only” be going on for about a week, and if he needed a peaceful place to work he was welcome to come over and use her home office – complete with AC and ADSL.

The day is saved!

Overpaid technologists can go about their otherwise meaningless lives creating mindless gadgetry and solutions in search of problems free from fear from fuBarrio’s destructive creativity. The news was so good and timely that Golden Lotus decided not to press her luck by asking if the landlord happened to have a week's supply of Twinkie snack cakes on hand.

Monday, February 05, 2007

Spring Buying Season Starts Today

It's the day after the superbowl.

Today typically this marks the start of the spring "buying/selling" season for real estate. I guess if you're in the market this is probably a big deal.

I don't know if I can really add anything new on this topic so I'm just going to repeat myself to anyone who has been reading along.

If you are trying to sell, and have any profit, cut the price immediately BELOW the latest comp's lowest price. You are in a FALLING market, and will need to be ahead of the curve, not behind it.

If you need to sell, and find yourself saying or thinking one of the following please seriously reconsider some market fundamentals:

-this place is different
-everyone wants to live here
-the downturn is the media's fault
-i'm not going to "give" my house away!
-as soon as the (insert foreigner, californians, babyboomers, new yorkers, martians) get here with the buckets of cash and thimbles of brains the market will pick up.
-there is a bubble in (insert: california, nyc, florida, etc) but NOT here!

The ONLY things holding the markets up right now are:

-sellers unwillingness to sell/take a loss (meaning low volumes),
-mortgage FRAUD...I really need to make a separate post on this -- think "cash back" at close neg amort, "liar's loans", etc etc etc
-inflation (your house is only going up in price because the dollars are getting less valuable)

If you think that your house is a good inflation hedge, think again. Home prices are so far out of whack with incomes that they can't keep increasing. Wage inflation in the US is not keeping pace with monetary/credit expansion. Result: people can't afford homes where they are expected to work. *temporary* solution -- low rates plus ingenious (stupid) lending products and practices keep the party going until NOW.

If, on the other hand, you're thinking of buying residential real estate, God be with you. The only thing that will keep values up is a collapse in the US dollar in my opinion.


Friday, February 02, 2007

Pride comes before the Fall

I've been offline a bit in the last couple of days.

I've been relocating and don't have internet (gasp!) in my new location yet. I'm currently typing this in a dhl package store on their "highspeed" connection.

I noticed that gold was climbing northward pretty powerfully, and then this morning took a sudden nosedive DOWN! :)

Pretty "expected" as things stand. I look for the powers that be (if you're a conspiracy nut like me) or the "swing traders" (if you're not) to try to knock it down a bit. *If* you believe that the "swing traders" include central banks, the IMF or anyone else that is using your tax dollars to prop up the slide in the dollar (and consequently tapping down the upsurge in gold), then rest assured they've got enough ammo to make a dent.

I noticed that the downdraft coincided pretty well with gold hitting 660/oz. For the time being, that is the new "line in the sand". The extent of the downdraft will depend on how much they want to defend said position and how much it rattles the new "bulls" in the gold camp. At the time of the writing gold is selling for about 648/oz.

I still expect at least one more good sized cram down (5% from the highs this a.m.) on the price before Chinese new year. Perhaps this is it and we won't get the pullback. Perhaps I will be (gasp!) wrong.

I promised a treatise on how to leverage this move in PM's as a way to hedge a potential calamatous financial event in 2007. I've been incredibly negligent in finishing that post, but will do my best to complete something on my borrowed Internet time before the Chinese New Year is upon us.