April 3, 2012
By Jeff Cox
Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from “Dr. Doom” Marc Faber.
Investors, particularly those in the “well-to-do” category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC.
Efforts to stem the debt problems have seen the Federal Reserve [cnbc explains] expand its balance sheet to nearly $3 trillion and other central banks implement aggressive liquidity programs as well, which Faber sees producing devastating inflation [cnbc explains] as well as other consequences.
“Somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation or through social unrest or through war or credit market collapse,” he said. “Maybe all of it will happen, but at different times.”
Noted for his pessimistic forecasts and gold advocacy, Faber nonetheless lately has been telling investors that stocks are a good choice as central bank policies pump up asset prices.
He reiterated both his commitment to stocks and gold, but said investors also can find value in other hard assets, particularly in distressed properties in the U.S. South.
15 Reasons Why The U.S. Economic Crisis Is Really An Economic Consolidation By The Elite Banking Powers
March 13, 2012
The American Dream
By The American Dream
Is the United States experiencing an “economic crisis” or an “economic consolidation”? Did the financial problems of the last several years “happen on their own”, or are they part of a broader plan to consolidate financial power in the United States? Before you dismiss that possibility, just remember what happened back during the Great Depression. During that era, the big financial powers cut off the flow of credit, hoarded cash and reduced the money supply. Suddenly nobody had any money and the economy tanked. The big financial powers were then able to swoop back in and buy up valuable assets and real estate for pennies on the dollar. So are there signs that such a financial consolidation is happening again?
Well, yes, there are.
The U.S. government is making sure that the big banks are getting all the cash they need to make sure that they don’t fail during these rocky economic times, but the U.S. government is letting small banks fail in droves. In fact, in many instances the U.S. government is actually directing these small banks to sell themselves to the big sharks.
So is this part of a planned consolidation of the U.S. banking industry? Just consider the following 15 points….
#1) The FDIC is planning to open a massive satellite office near Chicago that will house up to 500 temporary staffers and contractors to manage receiverships and liquidate assets from what they are expecting will be a gigantic wave of failed Midwest banks.
#2) But if the economic crisis is over, then why would the FDIC need such a huge additional office just to handle bank failures? Well, because the economic crisis is not over. The FDIC recently announced that the number of banks on its “problem list” climbed to 702 at the end of 2009. That is a sobering figure considering that only 552 banks were on the problem list at the end of September and only 252 banks that were on the problem list at the end of 2008.
#3) Waves of small and mid-size banks are going to continue to fail because the U.S. housing market continues to come apart at the seams. The U.S. government just announced that in January sales of new homes plunged to the lowest level on record. The reality is that the U.S. housing market simply is not recovering.
#4) In fact, a lot more houses may be on the U.S. housing market very shortly. The number of mortgages in the United States more than 90 days overdue has climbed to 5.1 percent. As the housing market continues to get increasingly worse, it will put even more pressure on small to mid-size banks.
#5) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009. Large numbers of American homeowners are deciding to walk away from these homes rather than to keep making payments on loans that are for far more than the homes themselves are worth.
#6) If all that wasn’t bad enough, now a huge “second wave” of adjustable rate mortgages is scheduled to reset beginning in 2010. We all saw what kind of damage the “first wave” of adjustable rate mortgages did. How many banks are going to be able to survive the devastation of the second wave?
March 6, 2012
By Alexis Leondis
BlackRock Inc. (BLK)’s Laurence D. Fink said savers need to become more aggressive investors as returns on bank accounts and Treasuries shrink and people grow older.
The traditional mix of putting 60 percent of assets in stocks and 40 percent in bonds is inadequate in a “new world” characterized by an aging population, a reduction in borrowing and risk-taking by individuals and governments, and a greater role of emerging economies.
“I’ve personally said many times I would be 100 percent in equities,” Fink, 59, said in a speech today to the Council on Foreign Relations in New York. “Most investors need a more diversified portfolio, but virtually every investor has to find ways to achieve a better return than they’ll get in cash or government bonds for the foreseeable future.”
The comments by Fink, chief executive officer of the world’s largest asset management firm with $3.5 trillion in assets, mark an effort by BlackRock to articulate an overarching view of markets and how retail and institutional investors should respond. Unlike Bill Gross’s Pacific Investment Management Co., where investment decisions have been guided by the firm’s “new normal” philosophy coined three years ago to describe a world of below average economic growth, each of BlackRock’s units has the freedom to articulate its own investment outlook.
February 7, 2012
“Obama makes yet another executive order. Ron Paul has said repeatedly that he would not use the executive order to govern, yet Obama seems to use them all the time.” –KTRN
US President Barack Obama has signed an executive order to freeze all Iranian government assets held in America and US banks abroad.
“I have determined that additional sanctions are warranted, particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran’s anti-money laundering regime and the weaknesses in its implementation” Obama said in a letter to Congress.
Obama claimed Iranian financial activities are posing “continuing and unacceptable risk” to the international financial system.
The executive order prevents any Iranian assets deemed within US jurisdiction – including foreign branches of American banks – from being transferred, paid, exported or withdrawn.
Obama’s decision comes just four days after the US Senate backed new economic sanctions against Iran. The sanctions targeted companies in joint uranium mining projects and organizations supplying the country with weapons.
October 18, 2011
The Dollar Vigilante
By Jeff Berwick
We are nearing the end of the grand experiment in nation-states, democracy and socialism. In case you hadn’t noticed, it failed miserably. Hundreds of millions were killed in wars engendered by nation states and made possible by fiat currencies and countless more were impoverished by the central banks instituted by the state. Riots and protests around the globe from Rome, to Egypt to nearly every major city in the US now attest to that.
Countries, however, are like living organisms and they will do almost anything to stay alive. They have always treated their tax-slaves (citizens) as milk cows and they will treat them as beef cows if worse comes to worse.
It is for this reason that it is more important than ever to both understand what is really going on – hint: whatever the government or what the newsreaders on your nightly news say is not what is really going on. It is also more important than ever to begin to protect yourself from your own government.
HAVING A SECOND PASSPORT GIVES YOU OPTIONS
Last year I got a call from an online brokerage I use in Luxembourg called Internaxx. After having had an account with them for a few years they called to let me know they’d be closing my account immediately.
I asked the obvious question: Why??
The lady replied that Internaxx had recently been bought out by a Canadian brokerage, TD Waterhouse, and since I was registered with Internaxx as a Canadian citizen (I was born in Canada and have a Canadian passport) that Canadian laws state that no Canadian stock brokerage can accept a Canadian client when it is operating outside of the country!
So, even though I thought I was safely away from the criminal Canadian Government’s rules and regulations in Luxembourg, all it took was for a Canadian company to buy that brokerage and all of a sudden I was persona non grata.
Luckily, and smartly, for me, I have another passport and so I said to the lady, “I am also a citizen of XXX country, could you unregister me as being Canadian and put me down as being from that country?”
She said yes. So, I didn’t have to go through the hassle of moving my account elsewhere. But, it just goes to show the benefit of having alternative citizenship – preferably in a country that does not have the resources nor the ability to police you around the world.
Sure, this time they were only looking to close my account. But, with all western governments drowning in debt, the next time it could be to impose an asset tax or even to seize my assets.
GOLDMONEY CLOSES DUTCH ACCOUNTS
Recently, a similar thing happened to Dutch citizens who held money or gold with Goldmoney.com in England or Switzerland.
Goldmoney.com sent a notice to all of its Dutch clients stating that their accounts would be immediately closed because the Netherlands financial regulator had deemed Goldmoney.com was “offering investment objects in the Netherlands without a licence.”
A licence, for those that don’t know, is a form of extortion done by criminal organizations such as governments or mafia to get you to pay for something you don’t need nor want.
Nonetheless, Goldmoney.com felt obligated to close all the accounts for Dutch citizens instead of facing the wrath of the Dutch Government.
Again, it was only to close accounts this time. But as things continue to collapse you will want to have options with other passports in order to evade the attempts by your own government of seizing your assets.
A SECOND PASSPORT IS MANDATORY FOR SAFETY
We consider holding at least one other passport as important as any other facet of your financial portfolio for the coming years. Leaving yourself at the whim and control of one government, especially if it is one of the heavily indebted western governments (which is almost all of them), is tantamount to playing russian roulette with your assets.
It is for this reason we recommend that people look to get at least one other foreign passport – and preferably from a government that is not intricately tied to the western financial system nor heavily indebted.
For this reason we have identified two countries which not only offer a passport without you having to live there but also offer it for very cheap by international standards. It takes about three years to get each but you will have residency nearly immediately after your first application which could help you organize your assets in the meantime.
The two countries we prefer and have covered heavily in The Dollar Vigilante for subscribers are the Dominican Republic and Paraguay. We have set-up a custom service to help get you a passport in either of those regions as quickly and easily as possible. You can find more info on the Dominican Republic passport service here and the Paraguay service here.
NO INCOME TAX AND OTHER BENEFITS OF FOREIGN RESIDENCY & CITIZENSHIP
Of course, having foreign residency and citizenship can have many other benefits as well.
For those who earn income over the internet or from outside of your home country attaining foreign residency could reduce your income tax dramatically, even to zero if you set it up properly. Paraguay, as example, has no income tax. And the Dominican Republic only charges income tax on income made in the Dominican Republic. Check with a tax advisor before making any decisions but residency in locales such as these can possibly save you a lot in taxes – all legally.
As well, should you wish to leave your country and reside somewhere for an extended period, having your residency or citizenship in a foreign country makes it all the easier. The Dominican Republic and Paraguay are both civilized, modern, beautiful places to live.
IT’S ALL HAPPENED BEFORE
Preparing now for what is obviously coming only makes sense.
It’s not like any of this is new. The US Government forced Americans to turn in their gold to the government in 1933. In Ireland they have begun charging an annual “asset tax” on all pensions. And, in Hungary, some pensions were already seized and forced to invest in government bonds. This is the likely tact of the US Government in the near future as they begin to run out of creditors other than the Federal Reserve. They will likely look first to nationalize 401k’s and IRA’s and force them into buying government “patriot bonds”… for the greater good, of course.
BETTER SAFE THAN SORRY
We think the phrase, “better safe than sorry”, is widely overused (see “Being Better Safe Than Sorry”) but in this particular instance we think it is wiser to take precautions than to leave everything up to chance.
If the western financial system implodes in an organized and structured manner then it may turn out that having a foreign passport wasn’t a necessity. However, if it implodes in a chaotic way – which is the way these systems always collapse – when the time comes that some countries institute capital controls and begin to seize their citizens assets you will be very thankful that you took a small amount of time and money to set yourself up with a second citizenship whereby you have a much better chance of protecting your assets from your own government.
September 23rd, 2011
By: Dan Caplinger
In your quest to save for retirement, tax-favored retirement accounts are valuable tools to help you set aside and grow your money. But eventually, all good things must come an end, and regardless of if you want to, you need to start taking money out of your traditional IRAs and 401(k) accounts. If you don’t, the IRS will gladly sock you with a penalty you simply can’t afford to pay. And with the recent volatility we’ve seen in the stock market, you need to make sure your retirement investments will produce enough income to give you the cash that the IRS makes you take out.
Dealing with the RMD
Millions of workers have enjoyed the benefits of retirement saving through IRAs and 401(k)s. When you set money aside in one of these tax-favored retirement accounts, you generally get to fund it with pre-tax money — meaning that you either get a deduction on your tax return (in the case of IRAs) or have that money excluded from your taxable income on your paystub (for 401(k) accounts). That’s a huge boost that often gives you thousands in tax savings year in and year out.
Even better, once your money is inside your retirement account, you get to defer paying taxes on the income it generates throughout your lifetime. The only time you’ll pay tax on a traditional IRA or 401(k) is when you take money out of your account. That’s why most people try to leave money inside their retirement accounts as long as they can.
When lawmakers created IRAs and employer retirement plans, they knew that taxpayers wouldn’t want to pay taxes any sooner than they had to. So they included provisions in the laws that govern retirement accounts to force people to take their money out under certain conditions, regardless of whether they actually needed the money. These required minimum distributions apply to two groups of people: accountholders who will be age 70 1/2 or older at the end of 2011, or those who inherited IRAs and weren’t eligible to do a spousal rollover into their own accounts.
What’s the deal?
Once you know that you have to take an RMD, the hard part is calculating it. Each year, you have to take out a fraction of your total traditional retirement account assets. That fraction is determined by your life expectancy and will change every year, but for those in their 70s, the required withdrawal is about 4% to 5% of your retirement portfolio. By the time you’re in your 90s, that figure can approach or exceed 10%.
And worst of all, if you don’t take your RMD, the IRS hits you with a 50% penalty on the amount you should have taken. So you simply have to find a way to come up with the cash.
Financing those distributions is where dividend stocks come in. If you want to take your RMDs without selling stock, then you need stocks that will pay you enough income to cover the RMD.
Fortunately, those who’ve just started having to take RMDs have plenty of good choices to get them into the 4% to 5% yield range. Utility stock Duke Energy (NYS: DUK) and telecom giant AT&T (NYS: T) are obvious choices with highly attractive yields. But at current yields, you have the luxury of building a truly diversified dividend-producing portfolio. For instance, recycling giant Waste Management (NYS: WM) offers not only a high current yield but also strong dividend growth, which can be even more important. Drugmaker Eli Lilly (NYS: LLY) and cigarette maven Philip Morris International (NYS: PM) also add some sector breadth while still providing the yield you need.
Once your RMDs get into the double-digit percentage realm, though, your choices get more limited. Rural telco Frontier Communications (NYS: FTR) and mortgage REIT Annaly Capital (NYS: NLY) make the grade as far as yield is concerned, but they may not fit well with the conservative investing styles that most older retirees prefer for their portfolios. Nevertheless, they remain an option for those who are dead-set against selling stocks and invading their principal.
If you have to take an RMD, you have until the end of the year to do it. But with the end of the year often getting hectic, think about doing it now rather than procrastinating. With half your distribution on the line, you can’t afford to mess this up.
Today, Kevin answers YOUR questions! Find out why the government is going after him if he’s the one who creates his own reality, and why someone would want to work full-time internally within the Global Information Network instead of becoming financially free as a member.
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April 7th, 2011
By: Douglas McIntyre
For most Americans, it is unimaginable that the U.S. could put its iconic properties on the market. But as the nation struggles to balance its balance sheet, should the federal government take a look at selling some of its most valuable assets?
It wouldn’t be the first time that a large nation has pondered taking such drastic steps in recent years. Just two years ago, the Greeks and the British probably never would have thought that some of their famed assets would hit the auction block.
But since then, Greece has been saddled with such onerous budget restrictions due to E.U. bailout guarantees that some have suggested that it sell some of its popular islands. A number of the country’s politicians are attempting to block the transactions. One of the jokes about Greece — which sadly now has some basis in reality — is that it will have to sell the Parthenon. The Greeks don’t find the joke very funny.
The British have also begun the sale of assets, which could eventually include the Royal Mail.
Asset sales by governments have a long history. A large percentage of the geographic area of the United States was acquired through the purchase of land from other governments. In the Louisiana Purchase, Napoleonic France, strapped for cash due to its wars in Europe, sold the United States land that is now part or all of 14 states for the 2010 equivalent of $219 million.
24/7 Wall St. has identified nine U.S. assets that could generate a total of $543 billion — or about a third of the annual budget deficit for the government’s current fiscal year. The list is by no means comprehensive, but shows that the U.S. has salable assets that, in some cases, are worth hundreds of billions of dollars.
Each of the nine assets on this list were compared to private companies or entities that already have established public valuations. For example, to put a value on the U.S. Postal Service, 24/7 Wall St. looked at FedEx (FDX) and United Parcel Service (UPS), and to estimate a sale price for the New York Federal Reserve building, they examined nearby Wall Street real estate. We looked at cash flow and revenue figures when comparable values were not available. We determined the size and dimensions of each asset using U.S. government data, which was taken from dozens of departments and agencies.
It’s worth noting, though: While these nine sales and licensing agreements might make a big dent in a single year’s budget deficit, they wouldn’t balance the budget, and the current federal debt — the overall amount we owe — is around $14 trillion. That $543 billion is just a drop in the bigger bucket — we’d need to find many, many more assets to put on the auction block to significantly reduce the debt. But this is a huge country, and this list is just the tip of the iceberg.
1. New York Federal Reserve Building
Guesstimated price tag: $750 million
Location: Manhattan, New York
U.S. ownership: 87 years
Who should buy it: Donald Trump, SL Green, Tishman Speyer
Why it’s valuable: Location
The Federal Reserve Bank of New York is located in a massive building that takes up an entire block in Manhattan’s Financial District. Construction of the building was completed in 1924. It’s 14 stories tall and features an additional five floors underground. If the bank relocated to less valuable real estate, the government could make a significant amount of money. A recent notice issued by the New York City Department of Finance estimated the building’s value for the 2011 to 2012 tax year to be $88,594,000. While this may be the value for tax purposes, a review of comparable buildings in Manhattan revealed this wold likely be significantly less than its market price. On Madison Avenue, a similar building was sold for just under $1 billion. In all likelihood, considering its location and the historical significance of the building, the government could fetch closer to $750 million from a buyer like Donald Trump or SL Green.
2. Hoover Dam
Guesstimated price tag: $415 million
U.S. ownership: 75 years
Who should buy it: Duke Power, Con Edison, Southern Company
Why it’s valuable: Hydroelectric power
The Hoover Dam includes one of the largest hydroelectric installations in the country. If a company were to purchase the structure, it would most likely do so to privatize the dam and reap the benefits from the sale of the power it generates. According to the Department of the Interior, the average annual net generation for the Hoover Dam from 1947 through 2008 was about 4.2 billion kilowatt-hours. The Energy Information Administration calculates the average retail price of a single kilowatt-hour, as of 2010, at 9.88 cents. That means the energy produced by the dam each year is worth roughly $415 million. Of course, the operators of the power plant must deal with additional, necessary costs, such as flood control. Without the benefit of a profit and loss statement for the dam, one year’s revenue is a reasonable — though quite conservative — valuation.
3. Randolph Air Force Base
Guesstimated price tag: $1 billion
Location: San Antonio, Texas
U.S. ownership: 81 years
Who should buy it: City of San Antonio
Why it’s valuable: Could be converted to a commercial airport
There are many cases of former Air Force bases being converted into commercial airports, including the fields that are now Bangor International in Maine and Southern California Logistics in the Golden State. This usually happens only after a base has been closed, but there’s no reason to believe the government wouldn’t sell an operating base in an area where it could get a premium price for it. According to the Census Bureau, San Antonio is the fourth fastest-growing city in the U.S. The metropolis also happens to have a nation-high three Air Force bases within its city limits. Randolph AFB has two substantial runways capable of supporting all but the largest jetliners. Incorporating the costs the city of San Antonio would have to sustain to upgrade facilities and build a new terminal, Randolph could be sold for as much as $1 billion.
4. Naming Rights to the Grand Canyon
Guesstimated price tag: $1 billion
U.S. ownership: Became a national monument 103 years ago
Who should buy it: Large international brand
Why it’s valuable: Brand recognition
It’s very common for large venues, like stadiums and convention centers, to sell naming rights for tens of millions of dollars. The new Citi Field in New York (formerly the Met’s Shea Stadium) sold naming rights to Citigroup for $400 million. The U.S. government would likely get much more for a major national attraction like the Grand Canyon, which has more than twice as many visitors each year as Citi Field, and has the added branding value of being a major national landmark. This trend could spread to any of the hundreds of national monuments in the U.S., such as Mount Rushmore or the Washington Monument.
June 8, 2010
By Richard Evans
At about 09.25 GMT on the London Bullion Market, gold hit a record $1,251.85 an ounce.
“Gold rallied to a new all-time high this morning as worried investors continue to pile in to the precious metal,” said Rajesh Patel, head trader at financial betting firm Spread Co. “We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil.” Gold is viewed as a safe-haven investment in times of economic trouble.
US gold futures for August delivery hit a record high $1,254.50, and were later up $10 at $1,250.80. The precious metal also hit record highs in euro, sterling and Swiss franc terms.
Investors’ concern that loose monetary policy will unleash inflation is among the factors prompting interest in tangible assets such as gold.
Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.
April 2, 2010
China’s central bank said asset bubbles are emerging in parts of the world and in certain industries that may burst unless supported by real economic recovery.
Rapid asset price increases in major markets since 2009 have been pushed by “ultra-loose” monetary policies by governments around the world and “don’t mean real economies have recovered or will recover strongly,” the People’s Bank of China said in a report posted on its Web site today. Such gains “unless they receive sufficient support from macroeconomic fundamentals, may lead to a new round of asset bubbles that may burst,” the Beijing-based bank said.
The comments reflect concerns by policy makers in the world’s third-largest economy about risks facing the global recovery as governments debate when to withdraw stimulus implemented to fight the financial crisis. Chinese Premier Wen Jiabao faces the same dilemma as he seeks to restrain inflation and curb property bubbles while maintaining growth.
“Central banks all face the pressing task of containing asset bubbles and inflation while ensuring economic recovery,” the Chinese central bank said in its 2009 report on international financial markets. A surge in liquidity in global financial markets may push up inflation once economies recover, it said.
Governments worldwide have spent more than $2 trillion in fiscal stimulus to spur growth and may face difficulty coordinating exit strategies because of the “unbalanced global recovery,” the central bank said. The withdrawal of support, together with the threat of inflation and the risks surrounding the sovereign debt of some economies complicate the process, the PBOC said.
Asset bubbles are the “real worry” as China emerges from the global financial crisis into a “boom time,” former central bank adviser Fan Gang said Feb. 1. Economists at the government- backed Chinese Academy of Social Sciences warned Jan. 11 that the nation’s gross domestic product could expand as much as 16 percent in 2010 unless policy makers withdraw stimulus.
Still, Premier Wen Jiabao on March 5 pledged to maintain a “moderately loose” monetary policy this year to cement China’s recovery, while keeping inflation at around 3 percent. The People’s Bank of China is targeting a drop of 22 percent in new lending this year from last year’s record 9.59 trillion yuan and has told banks twice this year to set aside more cash as reserves to curb excessive liquidity.
Consumer prices rose 2.7 percent in February and property prices in 70 major Chinese cities climbed the most in almost two years, prompting the government to order lenders to tighten loans to the real-estate industry.
The PBOC’s comments today echo those of other international central bank officials. Donald Tsang, Hong Kong’s chief executive, said Nov. 13 that he was “scared” that money flowing into Asia because of low interest rates in the U.S. could lead to another crisis in the region. World Bank President Robert Zoellick told Australian Financial Review on Jan. 13 that a liquidity-driven world recovery faces the risk of asset price inflation.