Italy Goes the Way of the PIIGS and Belgium Waffles

12/3/2010 Portland, Oregon – Pop in your mints…

Oh my, fellow taxpayer!  All of the action is in the Bond markets lately!  Specifically in Europe.  Our current working hypothesis as to what will unfold in Europe is that the financial crisis is serving the purpose of generally weakening the governments of the Euro zone to the point where they will be compelled to turn over most of their authority to a central government which is currently located in Brussels.  Whether it is premeditated or not is subject to a debate that we will not enter into at The Mint.  We are simply observing the data and following it to a logical conclusion.  And how entertaining the action is to watch!

The latest act in the drama of the emerging sovereign debt crisis is playing out with Italy and Belgium preparing to take center stage.  From the New York Times:

Italy and Belgium have a lot in common: both are less dependent on foreign creditors than Greece or Ireland. But each is plagued by severe political dysfunction, which has raised questions about whether they can ever repay a mountain of debt, respectively the second- and third-heaviest loads in the European monetary union after Greece.

Wikileaks Founder on the Run, Is the US prepping for Austerity? Backwardation returns to Copper and what is Silver really worth anyway?

12/2/2010 Portland, Oregon – Pop in your mints…

A quick view of the news finds the Wikileaks fiasco taking on a life of its own.  It is interesting to see that politicians really are as fickle and childish as we imagine them to be.  While we haven't read any of the leaked documents, we imagine it would be like reading a log of text messages amongst teenagers.  We are not sure if anyone on the planet thought that modern day politicians were trustworthy but the little we have heard about the leaked documents appears to leave no doubt that they are not.  So why do we give them so much power of the economy or the money supply?  This troubles us here at The Mint.

In other news we see that the debt reduction commission in the US is being taken seriously, at least by the mainstream media and the FED is urging it on.  Could it be that the FED sees that its balance sheet is no match for the coming onslaught in the Bond markets?  It is so severe that Obama has announced pay freezes for government workers and the government needs to unload its surplus property.  Leave it to government managers to sell property at the bottom of the market.  It must really need the money!  Does the US government see Armageddon on the horizon in the Bond Markets?  Is the Treasury beginning to wonder why the Federal Reserve is out-bidding everyone by a country mile at recent bond auctions?

Mega Maid! Collapsing Bond Market to Suck Air Out of Stocks!

12/1/2010 Portland, Oregon – Pop in your mints…

Writing is such sweet sorrow.  Sweet because there is no lack of things to write about.  Sorrow because the financial authorities have made such a mess of things that there is no lack of things to write about, grand errors to expose again and again until we get it.  The economy has been on adrenaline for almost 100 years and increasingly dangerous doses for the past 40.  The crash will be grand and we must understand what is going on.  If nothing else so that future generations can learn from the mistakes.

Back from the big picture to the problems of the moment.  When will it end?  We know more or less how, so we must look daily for the time to approach.  Is it on the horizon?  Your guess is as good as ours so we will consider what we know.  Just when you thought it was clear sailing ahead for stocks and bonds, another wrench is thrown into the works.  We have been focusing here at The Mint on the upcoming fireworks in the Bond Markets.  Not that we know exactly how or when the market will collapse, we only know that its collapse, in some way, shape, or form, is imminent.  Two of a myriad of reasons came into focus for us today which we will now attempt to pass along.

Iceberg! Right Ahead!!!! The Growing Moral Hazard in Bond Markets

11/30/2010 Portland, Oregon – Pop in your mints…

What in the world will become of the Bond Markets?  The question troubles us.  Equity and Commodity Markets are free to be basket cases.  It is their very nature, it comes with the territory.  One day you are up, one day you are down.  You would be a fool to take them too seriously.  But Bond Markets are another story.  People expect more out of Bonds.  Like an older child, they are expected to act "responsibly."  While a reasonable person may store his vacation funds in equities, he puts his retirement in Bonds.  Bonds are supposed to be reliable and only issued by parties who over time have made good on their word to return money to the lenders as agreed.

But what happens to this dynamic when the money itself becomes suspect?  As we have investigated in prior Mints, what passes today as money is in large part an impostor.  Like all impostors, it looks great from a distance but up close it is easy to see something is amiss.  Once the impostor is discovered, at a minimum the impostor is asked to leave the party.  If the impostor happens to be the host, the party ends altogether.  The current impostor money is hosting the party in the Bond Markets.  How much longer can it last?

The Productive Purpose of Speculation

11/29/2010 Portland, Oregon – Pop in your mints…

Today as tensions in Korea continue we find ourselves pondering an activity that is vilified in many circles yet is an indispensable part of everyday life, modern or otherwise.  This vilified activity is popularly called speculation.

What is speculation?  To read the financial news over the past two years, one could equate speculation with gambling.  In a way, they would be correct.  A speculative action involves accepting a known risk in exchange for a reward that is uncertain.  All that can be said for certain is that the speculator, the person taking the risk, believes that the reward to be received outweighs the risk that is accepted.  Only with the benefit of hindsight can one say that the speculation was brilliant or insane.  Before hand, all opinions as to the speculation are in and of themselves simply speculations with regard to the speculation that they are speculating about.