04/28/09 Tampa Bay, Florida Addison Wiggin, as part of an advertisement for the new Richebächer Letter, reminded us that “Last holiday season was the slowest in four decades” which is bad news, of course, but it does explain how come I got so few Christmas presents 40 years ago, a time from which I am still carrying a grudge against Santa Claus for the flashy Harley chopper I never got, even though I asked for one every freaking year.
And it is Absolutely Devastating News (ADN) if the term “slowest” means “least money spent” and the term “four decades” means 40 years measured in, I assume, nominal dollars, which would probably put real, inflation-adjusted spending during the last holiday season down to “the slowest since Ebenezer Scrooge heroically stood up against the tyranny of the whining, lazy poor, most of whom are that way because of the stupidity of their actions and choices.”
Then, I gotta admit, I was surprised to learn that Addison Wiggin, of Agora Financial, has a “Popular and Newly Updated Book”, titled The Demise of the Dollar: and Why It’s Great For Your Investments, of which I have a copy of the old, not-updated book.
I think he actually just threw it in there to taunt me, as in, “How’s your stupid book coming along, Mogambo?”
I have to admit that it is coming along very slowly since I cannot think of a way to write a book without doing any of the actual work of writing a book, unless it is just another collection of wildly pornographic pictures from my personal collection, like the first economics book I wrote, where, for example, girls named Suzette posed provocatively while moaning and saying things like, “My name is Demand, and my hot lust for you is increasing, producing an upward-sloping demand curve, but, because of your limited-though-lusty Supply of Hot Mogambo Love (HML), only drives up the price I must pay! I want you, Mogambo, no matter what it costs!” and, “Give me all of your Hot Mogambo Love (HML)!”
But my lazy worthlessness or penchant for depravity is not, for a pleasant change, the point under discussion, but rather about how so little money is being spent that Mr. Wiggin again grabs my attention, saying, “Total U.S. retail sales have rolled back to levels we haven’t seen since 2005,” which is made more comprehensible if you “Imagine if every single retail shop opened in the last three years shut down overnight.”
The fact that a local barbeque place opened and closed in the last three years brought this tragically home to me, but it’s going to get worse as he notes that “it was the first wave of defaults in ‘subprime’ mortgages that sparked today’s economic meltdown,” which was bad enough, but not as bad as the news that a “second wave” of “toxic property loans, however – a flood what you call ‘option ARM’ or ‘Alt-A’ loans – won’t hit peak resets until 2011.”
And when they reset, the owners will find to their shock and dismay that these loan contracts “also carry a ‘reset’ risk in the fine print,” alerting the mortgagee that “already high monthly mortgage payments could as much as double – right at the height of the second biggest market meltdown since the Great Depression.”
He figures that “Millions more consumers will freeze up as their finances go over the cliff…more bank losses will drag down even more so-called ‘blue chip’ retirement portfolios… and the impact of the consumer bust will get ‘multiplied’ yet again. Millions more Americans could lose everything.”
I assume that those millions of Americans who “lose everything” will not be anybody that has a lot of gold, because if there is one Gigantic Freaking Lesson (GFL) from the last 4,500 years of governments spending themselves into bankruptcy that has pounded, pounded, pounded itself into my Tiny Pea-Brained Head (TPBH) ever since the day I landed on this ridiculous planet, it is that gold is the place to be, right about here, in the Monetary And Fiscal Stupidity Cycle (MAFSC), which makes me giggle with girlish glee, “Whee! This investing stuff is easy!”
Hi Mogambo – love your column. I read the below extract yesterday and thought it may be of interest. Interested in your response.
Gold
The price of gold is currently almost exactly where it was about fifteen months ago in January of 2008 and yet over that time just about everything that a gold bull could have hoped to happen has happened. Fifteen months ago the hope was that the write offs that were then being announced relating to subprime losses would be ‘contained’ and limited to just a few hundred billion dollars. Now the world knows that the losses are substantially greater and possibly still growing, and that efforts to ‘contain the losses have failed with the financial catastrophe having clearly infected the real economy. In January of last year there was still a belief in both financial and automobile companies, Citigroup and GM both traded at about $30 compared to two or three dollars now and AIG was at $60, still only down 20% from its all time high rather than the 98.2% fall it has now suffered. At the same time as the catastrophe was unfolding central banks around the world embarked upon the most aggressive stimulus efforts the world has ever seen.
These efforts culminated last month with quantitative easing being employed by many central banks. If gold bulls had been told fifteen months ago, with the price of bullion approaching $1000 for the first time, that such cataclysmic events would lie in the immediate future, accompanied by central bank printing presses running, then expectations for the gold price would have been extravagant in the extreme. A continuation of the parabolic rise that had seen gold double over the previous two years would have been expected and yet, despite unprecedented turmoil and panic, the price remains the same. Perhaps the price had already factored in so much of what was to follow, possibly in the same way as equity markets have so efficiently done prior to the IMF issuing their bleakest outlook ever!
To Gen Yer, from JMR “I still have my purchasing power” which is all JMRs, which you are whether you like it or not! (Say it in the mirror, followed by LOOK AT ME)Dam you’re goooood!!!
Don’t buy gold because you want an ultra-return… at least as defined in the last 38 years. Think relatively, for the moment: If everyone and their mother has lost 20, 30, 40, 40…. 98.2%(!!!) of their “investment” and you, a gold SAVER maybe a dismally horrifying 5%, then you, the GOLD SAVER can declare: “WELL THAT INVESTMENT WAS EASY! WHEEEEEEEEEEE!!!”
Dunno guys
I think Mogambo is right – plus very funny.
Things have changed alot
What are the current choices as opposed to 2006?
1. Real estate – nope
2. Fixed interest/bonds – yup but depends on a variety of variables.
3. shares – nope
4. Currencies – which – the yuang?? not the US dollar or pound.
5. ??
Where is the real store of value under current condtions?
That is what the neophyte investor would like to know.
ie soon I might have a few grand $nz to invest
Is there really any gold for sale? A lot of paper promises – sure. But the colored stuff that will match it’s brethern in my back yard coffee can?