As expected, the dollar has once again begun to show signs of serious strain against a variety of measures including gold which once again recently passed the $1000 mark. There has still been no responsible plan for confronting the dramatically increasing structural deficits. The only plan has been to print more and spend more.  In the words of Vice President, Joe Biden, “We have to spend more to avoid bankruptcy.” On September 9th at an investment conference in New York, former Fed Chief Alan Greenspan said the recent gains in gold are “strictly a monetary phenomenon.” Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies…What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment,” Greenspan said. This is quite a statement coming from the man who has been behind the curtain, controlling the printing presses of the world’s reserve currency from 1987-2006. Continue reading »

Finally, after several years of denial, real estate stakeholders in the many hard-hit areas have finally come to the breaking point. Distressed sales continue to be the driving force in most regions, particularly, South Florida, California, Arizona,  and Nevada. Sellers of residential properties are trying desperately to remain competitive amid a flood of units for sale. According to Metrostudy, a national housing research firm, the inventory level of unsold condos in South Florida represent a 31 month supply. Many people think that a two to four month supply represents an equilibrium with demand. Even in the face of these extreme conditions, there are some signs of light. Continue reading »

The economic climate of 2009 will be very tough, especially for the average consumer. The U.S. and European consumers are officially tapped out. Retailers are barely clinging to life, fighting each other to be the last one standing. While 2008 hit the financial markets, 2009 will be much more visible and hit closer to home for most people. Instead of reading about toxic CDO’s and crooks such as Madoff, which most people have never heard of before, they will be seeing their communities afflicted with a lot more liquidation signs and then a lot of vacant commercial real estate. The job market will be brutal. This does not necessarily mean that asset prices will continue a perpetual downward spiral because much of this is already priced in. Continue reading »

It has been about one and a half years since I posted my first commentary and since then I have added many new people to the email list. I am proud of my public predictions up until this point. Risking your reputation is one of the most difficult things one can do. For those of you that are new to my commentaries, I would like to recap some of the documented predictions I have made to date. Continue reading »

It is certainly feels like the panic selling typical of capitulation at this point, at least for the financial industry. However, I foresee more pain in the horizon. When you have financial institutions using so much leverage to support depreciating and overvalued assets, it is difficult to see the light at the end of the tunnel. This is especially true when you know that some of them are just now being forced to liquidate these assets in distressed sales which will force more asset writedowns at “healthier” financial institutions. Continue reading »

With oil seemingly headed straight for Goldman Sachs’ $150 new price target, there is lively debate going on right now whether or not commodities as a whole are in a speculative bubble. We may very well be at the beginning stages of a bubble much like the U.S. housing market was in a bubble during the early 2000’s but that is still open for debate. If so, who is responsible? Is it the greedy speculators? Is it the billions of consumers in Asia? Is it those corrupt OPEC ministers? While it might be overly simplistic to point the finger in any one direction, in this case, I find it much more logical to blame the past and present actions of government officials. More often than not they try to correct things only to exacerbate the problem or create an entirely new “problem.” A majority of the time, governments overspend, ignore the long term implications of their actions, and generally do not have the slightest clue about economics. As an investor, what I do like about them is that they are predictably foolish. The current debate should not be whether the commodities market is in a speculative bubble but rather, if it is in a bubble, how much and how long will government officials expand it. Continue reading »

“Inflation is back!” that’s what the headlines are starting to say and what I have been predicting for some time. Why is it back? The all mighty U.S. economy is slowing and the E.U. is also so how could we be in an inflationary environment? First of all, this should not be a shock to anyone. Stagflation (high inflation with a stagnating economy) has happened before and there is no reason to think that it cannot happen again. In fact, the pieces are in place for just that scenario. The aggressive easing of monetary policy is doing very little to improve the credit crunch but it is putting downward pressure on the dollar and other soft currencies. How can you make money in this environment? As Mad Money’s Jim Cramer loves to say, “There is always a bull market somewhere.” Right now, that bull market is in commodities. Continue reading »

What is going on with the real estate market in the U.S.? How bad will it get? When is it time to jump back in? Should sellers wait it out? These are questions frequently posed to me. My answers often disappoint people, which is no fun but I am not one to say what I do not believe. Obviously, different regions have their own set of circumstances. As a general rule, any markets that experienced phenomenal appreciation in the past couple of years are getting slammed. Manhattan is an exception to this because it was a direct beneficiary of Wall Street’s leveraged buyout mania. 2008 will be a different story for Manhattan as well. It is always ultimately a question of supply and demand so let us explore this balance in order to make an informed assessment. Continue reading »

When I first heard the term Web 2.0 about two years ago, I thought, “maybe that’s some kind of faster Internet technology.” I have to admit my ignorance and that I truly believed it was just a gimmick to promote Internet companies. I could not have been more wrong. Being a person that is fascinated with growing trends, I am currently mesmerized by the very real and significant impact that the so called Web 2.0 is having on our lives. Continue reading »

The Federal Reserve is one of the world’s most influential institutions. Its mandates are to maintain price stability, ensure the smooth flow of money, and act as lender of last resort in face of severe financial crisis. It seems that the the Federal Reserve has a strong inflationary bias and it has failed over the long run to maintain value dollar. If it were not for the current integration of the global economy and the use of the dollar as the world’s reserve currency, inflation would be a much bigger problem. With the growing support for protectionism and dollar weakness, some of our saving graces may be coming to an end and we must question how we can protect our capital. The fact that U.S. government does not seem to have any real desire to balance the budget does not make the Fed’s job any easier. Continue reading »

Clearly, we are at the early stages of a very significant credit crunch that will need to naturally work itself out if we are to emerge on more stable economic footing. Despite the Federal Reserve and the ECB having significant ammunition to help improve liquidity, such measures will be rather superficial in light of how pervasive the problems are. It would be unfortunate if central banks and federal governments extend the current credit bubble because the repercussions would be even greater in the future. Instead, would be better to save the big guns for when things get worse. Continue reading »

Where are we at now? We are enjoying unprecedented global economic growth and the world is still flush with liquidity. There is a lot of cash out there looking for a home and enormous assets are being traded like baseball cards in 4th grade homeroom. The liquidity has been fueled primarily by low interest rates. Low interest rates have kept a lot of money on the sidelines ready to be invested and have also enabled powerful tools of leverage used to acquire huge assets. Quite a rosy picture but as economic history has taught us all good things come to an end, at least for a while. Continue reading »