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QE: Quantitative Election

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After tonight’s “debate,” I offer a brain re-set.  You’re welcome:

 

[youtube:http://www.youtube.com/watch?v=kpZhZAr1cQU&feature=related 450 300]

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Look you, I don’t want to hear any shit.  Do you know what it’s like to have every client you’ve worked with over the last 36 months wanting to get out the door by Christmas? No, of course you don’t, because we’ve never had a bizarre set of economic circumstances like this before, where the difference between getting a deal done in this tax year and the next are approaching 30% of the value of a transaction.

Let me explain…  A lot of people don’t understand that, Fiscal Cliff aside, there’s already an additional 4% Obamacare tax  that’s going to be added to capital gains on any deal that has the misfortune of closing in 2013 instead of 2012.  Then there’s the possibility of the Bush-era tax cuts lapsing, and you add another nickel, minimum.  That’s nine percent more than what you’d be paying on this side of 2012, or a 60% increase in your gains tax burden.  And most of my clients are people who have close to zero basis, since they tend to be folks who started their companies, or took them over from pop at some pocket change transfer price.  So if we are talking about a $100 million dollar sale price, that’s $9 million extra you have to pay Uncle Barack next year if things stay where they are right now.

I don’t care how freaking rich you are, a nine million dollar delta is a ball sweat inducing bill that you’d want to avoid.  And that’s been the consensus of everyone I’m talking to right now.

The other problem with rising capital gains rates is they depress valuations by cutting into after tax returns on capital.  That means not only does one’s purchase price get taxed at an increasing rate, but the multiple paid on a business will be lower also.  Can you say “double whammy?”  (That’s why the public markets will get rocked if Obama wins as well. )

As a result, my life has been a nightmare as of late.  If I’m not on the road doing management meetings (with dinners, lunches, breakfasts, etc) , I’m doing back-to-back-to-back conference calls.   I’m just hoping I can get some of these guys through the funnel.  I already know they all can’t fit.  Such is life.

So I’m sick of apologizing, but please do know I’m keeping an eye on the market enough to signal to you when I think it might be time to get in or out.  Despite the fluctuations and the newest Romney Ryan positivity, I don’t think it’s time to get back into the precious in a giant way.  I think there’s gonna be a nice scare here before Turkey Day to shake some folks out, and then it’ll be time to pounce for the Santa Claus Cokefest and a Smile.

I liked TC’s move today, as I have twelve boatloads of that radioactive shit, having ingested a tonne when it dropped to the $2 level (averaging down, don’t cha know?).  I remain solid in my thinking that miner will become trade bait for some large, cash-rich insitution.  Also, RGLD just did a 5 million share offering with Goldman at $91.  I think this will knock the price down over the next couple of days, maybe even below $90.  If so, that is a huge gift, of which you should take full  advantage…

Best to you all.

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Enter, Weimar

Weimar
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I guess my jaw is just going to drop every day right into November 6th  of this year.  Yesterday, I stood agog as the U.S. National  Media did not merely let slip their masques of “Objectivity” but tore them off completely in defense of their Dear Leader, The Obama.  It was like we were back in the days of “Soviet Union,” when Pravda and Tass would not only mouth whatever “truths” the Soviet leadership would set them to, but also pro-actively attack dissidents of the regime in order to discredit them. 

When our embassies in Egypt and Libya were attacked “coincidentally” on 9/11, and our Executive Branch Administration decided to respond with an apology instead of condemnation, I guess I wasn’t completely shocked when the MSM house organs (NY Times, Boston Globe, LA Times) buried the story well into their papers to clear room for important Romney/Ryan high school reportage.  What was a shock, however, was watching the press go after Mitt Romney for — very appropriately, IMHO — condemning the wrong-headedness not only of the rioting Islamacists, but of the Obama Administration that was feeling their pain.  Incredulously, I watched as the biggest media firms  in the country went after Romney in a (now confirmed) coordinated attack like he was the guy who murdered our ambassador in Libya instead of being the only Presidential candidate to take time out of his day to remark upon it.

No, what was important to the press was that Romney was condemning the Obama Administration, and everyone knows that the Main Stream Media’s number one job is to advocate for the Democrat President, right?

Right?

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Meanwhile, on day four of “Jaw Dropper Week,” we hear from yet another  uncompensated (well, sorta) member of the Committee Re-elect the President Again (CREEPA) — Mr. Ben Bernanke.   Not two weeks after Mitt Romney all but said that Fed Chair Bernanke was likely selling pencils come this January, the Bearded Bandit decided to show just how far he’d go to keep his job.

In a scene that seemed cut from the classic Mike Judge movie, Idiocracy, Mr. Chairman has decided to cut loose with your sovereign currency in such a way that soon we will be purchasing extra-wide checks to accomodate the extra zeroes we’ll have to write.  And he’s not doing it in any kind of secretive “QE4” way, either.  No, he’s just going to purchase — with fake money! — US mortgage bonds, at $85 billion a month til the end of the year, and then $40 bn a month, apparently until morale improves!

It’s fucking mind-boggling, if you’ll excuse my French.  Just stutteringly mad.

We are spitting in the face of people who hold our dollars world wide.  We are saying, “See this? This hundred dollar bill?  I wipe my arse with it!  Have some!” 

“Oh, yeah… and vote Barry so I can keep my job, eh?  Thanks much.”

Anyone got a line on a wheel barrow factory I can invest in?

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As might be expected, gold (+2.11) and silver (+4.33) are screaming.  More analysis of the traditionals tonight, but the ETFs are your best bet at the moment (GDX, GDXJ, SIL, GLD, SLV, even AGQ and NUGT).  Go nuts, mind as well.

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Deja Vu All Over Again?

[youtube:http://www.youtube.com/watch?v=fZgQhnNRSuw 450 300]

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 The empty suit video above aside, I’d like to direct you to an excellent Wall Street Journal article that reviews the scope of our Entitlement State circa 2012.  It’s not that we have reached an unaffordable precipice (we most certainly have), but that the extent and volume of government fund transfers both in dollar terms and in terms of the percentage of the citizenry receiving transfers has begun to transform our own national character.  The article is appropriately called “Are Entitlements Corrupting Us?”

A lot of U.S.-based  and foreign leftists tend to complain whenever anyone brings up the subject of American Exceptionalism, but I wonder how many of them are enjoying this current slide into mediocrity, and how many will be happy when we’re just another European-type welfare state?  I think quite a few of them have a niggling feeling in the back of their head that something is slowly being lost, much as the rest of us on the other side of the aisle have done.  I don’t think one can help it.  I also cannot believe that the majority– even on the Left– sense this will be a net positive for the world.

But who really knows? Spite and schadenfreude are powerful emotional succors.  One never knows where a person, once corrupted, will get their kicks.

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The dollar continues to tumble overnight, but draws near some major Fibonacci support at the high $80.80’s region.  Don’t be surprised if we get a bounce.  Perhaps a weak one, but maybe enough to deflate this current gold and silver run up for several days or even over a week.  I’m cautious here, only because I saw a lot of euphoria last week.  I’m about 60% invested on my PM positions, and will be patient here.

Best to you all.

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Change We Can Invest In

[youtube:http://www.youtube.com/watch?v=6yD43OrcjDI 450 300]

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Overall thumbs up to the RNC.  Some lame moments, but this is the Republicans, after all.  They are the opposite of slick.  Unlike many, I enjoyed Clint’s off the cuff rambling.  He’s like your crotchety grandfather — the one you got your sense of humor from, the one who could always make you smile.  Rubio had the second best speech of the convention, after only Ryan, and his tying his own immigrant roots-story into the Euro-style socialist policies of the Obama Administration was as spot-on as it was rhetorically brilliant.  To whit:

“These (Obama policies) are the ideas that people come to America to get away from.”

Brilliant.

Mitt was better than I expected, if only third place (Christie was terrible, IMHO, btw).  He humanized himself, I thought, and connected with the women’s vote, which will be crucial.  His economic versatility can be taken for granted, and it will be what helps save this Republic, but he’s not going to get that chance without “the womenses.”  Unlike Obama, he’s not just another pretty face.

I’m reasonably upbeat about the prospects of the GOP ticket going into November, but much work remains to be done.  Despite Obama’s Jimmy Carteresque record, he’s got major dollar-equivalent support from the likes of the major networks and wire services.  The good news is the American populace is discounting these propaganda organs substantially in the 21st Century.  The Obama-Reid-Pelosi abysmal record is there for those who want to review it,  and it’s our job as intelligent arbiters of our own republic to make sure the truth is not buried under slander, spin and misdirection.   God bless us all.

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I think yesterday’s downspike may have presented an opportunity, market-wise.  I may start to step back into some of my sold off SLW and SIL positions.  I also like SLV for the duration here.  Those of you who have not done so may even think about physical silver.  I think we’re done pulling back and getting ready for the (longer term) move back to the 2011 highs.  We’re back above the 200 day EMA (and pulled back to it yesterday at $29.40).  We may pay pull back to fill in some gaps in the recent rise, but I don’t see SLV getting back below $28.50 any time soon.

For those fleet of foot and young enough to throw some bones on a play, I think BAA presented a nice opportunity yesterday on that big pullback.  If you look at this five minute chart, you’ll see a bunch of buying in the last hour of trading, all at that magic $4-dollarish mark.

I think this thing is headed back to $5.00 at some point before year end, and that’s 20% from here. Keep in mind this is a risky one, and against my usual gold miner picking strategy as it’s got tonnes of political risk, being in the “Democratic”(hah!) Republic of Congo. Keep your finger on the “caution” button for this sucker.

Another beaten down stock I was asked about (by Ragin’ Cajun, it turns out, sorry I took so long RC!) is rare earth miner MCP — Molycorp. I don’t own any of this but looking at the chart, it seems like this would be as safe buy with your stops set below the close on the 28th ($10.75).  I think yesterday’s action was typical back and fill volatility, and MCP is ready to join the re-inflation party Chairman Bernanke is about to touch off in pursuit of “four more years” for he and Barry.

Best to you all.
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Damn, It’s Good to Be a Crony!

[youtube:http://www.youtube.com/watch?v=2aO9tA5DWJM 450 300]

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The above is satire, of course, but let’s not laugh too hard at the funny kiddies.  In certain European states, the “path to success” is through the government bureaucracies.  Is the U.S. approaching that level?  Food for thought.

If you have not already, you should be trimming your silver and gold positions, or at least the leveraged ones.  We’ve had nice move here, so let’s not get too greedy.  I’m out of AGQ, NUGT and ERX as of this morning.  I’ve also trimmed between 35-50% of the remainder of my largest positions.

Have a great Friday.

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Bonus Crony!  This goes out to the speech stomping Jim H, (D- Croneyville).

Tribute to Mr. Mays….

[youtube:http://www.youtube.com/watch?v=jVrCKk45cZQ 450 300]

 

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