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Thursday, July 30, 2009
 Well this week's big internet story is that Microsoft and Yahoo have reached a deal with their search powers combined. They are planning to gain enough search requests to at least compete with Google. Unfortunately for them, Google still has a market share of almost 80%. Even with their powers combined I don't see them getting more than 30%. I just don't think Microsoft has the positive branding it needs to have something successful right now. And what's left of Yahoo's is certainly going to go down the toilet now that they have further gotten in bed with Microsoft. I don't know many internet users that take Microsoft seriously (remember the failed Ad Campaign with Jerry Seinfeld). What they need to do is focus on revamping their core strategy. Stop being so greedy and focus on creating good products that people will actually want to use - and not worry so much about proprietary rights to information. Google is all about Open Source, and that is what is going to drive their success. Because the people that make their products successful are all pro open source. Whenever you create something cool, and then slam the door shut to all future innovation you are just killing technology. Technology is all about sharing peoples information and building on each other's work. This is what Open Source does and Microsoft and Yahoo just don't get this. It is my opinion that Google's future will be very bright as it seems like to me that M & Y just committed internet suicide.
I do a lot of technical analysis on the markets, it's something I got into a few months ago and I've found that patterns in the market are just fascinating. One that I have been exceptionally good at predicting so far is the dollar index, which tracks the movements of the dollar against 6 major currencies: Euro, Yen, Pound, Canadian Dollar (Yea I was shocked too), Swedish Krona and the Swiss Franc. I have found that this 78 level bottom is not sustainable against an emerging descending triangle. Generally what happens after a descending triangle is a continued fall or crash (see image). So, what this means is this long awaited dollar crash could easily come by the end of this summer. Starting in August, accelerating in September and by November it will be fully realized with economic chaos all over the United States. Sure that sounds pretty dire, but there are a few things you can do to prepare for this. Silver is probably my favorite investment right now at roughly $30 an ounce. Silver could easily go to $500 an ounce within a few years. However, silver is heavy to carry around (since so much less per pound of gold is worth so much more). So if travel is an issue, get some gold. It will be considered relatively cheap now at just under $1,000 an ounce. We could see it finally go over that $1,000 level this winter and by next year heading towards $1,600 an ounce and then eventually $2,000. Or, if you are like me and don't have a lot of capital lying around to just throw out on worthless metal (compared to food even in a post dollar crash world food is still better than gold/silver) then the next best thing is real assets. Things like firearms, equipment, tools, anything handy and useful, and of course food. Canned goods are so cheap right now, and they will likely be in short supply in the coming year. This is one investment I can make right now and I figure why not. I can buy about $50 of canned goods and have enough food for myself for almost half a year. Also get yourself a non-electric can opener (like back in the day). These ideas may seem a little rash, but I assure you it's better to be prepared than unprepared. This dollar crash is going to take a lot of people off of their feet, and some it will just flat out anger. Violence is very high on the agenda and I expect many will be feeling like they were just robbed - thus justifying theft as recourse. So, it is likely the coming months will see a lot of activity and turmoil, but be smart and don't let yourself do anything stupid.
The job of a representative is, well, to represent. The majority of these people have not done this in a very long time, and frankly I'm getting tired of it. What amazes me the most is that it seems like to me that for the most part people don't seem to care that this is going on. Sure they state that they disagree with this piece of legislation or that but overall what do they do about it? I think most people carry an apathetic attitude of "What can I do?" What can you do? That is a good question. Some would tell you to write your Senator, but that is in fact the problem. Who are you supposed to go to when the establishment is the root of the problem? It is like in those conspiracy movies, like The Firm with Tom Cruise (1993 I think). When you are in fear of your life, you can't go to the police, you can't go to your friends and you can't even talk in your own home. I think we are not in that big of a different situation today, on a national level. I think people are feeling dishenfranchised, unrepresented and frankly losing their country. A revolution is coming soon, and it will be here before we know it. Stand up for what you believe in, and you might just see yourself getting pushed back down. What will this government do if more people starting rising up? Will we see oppression, tyrany? Only time will tell.
 I think it is possible that we may see some bank holidays this fall. A Bank Holiday, for any of you out there that aren't historians, is a closure of all banks in the country usually for a few days. This was common during the Great Depression as it was known as the Emergency Banking Act. The goal was to restore solvency to the banks, but what actually happened was it got rid of roughly 1/3 of all of the banks out there.This means more centralization of power, and more control from fewer hands. Although the Bank Holidays did in fact restore a little confidence in banks and for the first time since the Crash of '29 there were more deposits than withdrawals. However, these facts considered, the control of finances from the people was removed. Roosevelt shortly enacted the Gold Seizure, and anyone with over $1,700 (of 2009 dollars) worth of gold was forced to give it up to the US government. That really isn't a lot of gold, in fact it is roughly 2 ounces in today's market. Therefore the majority of people who are planning on hoarding gold for their financial security would easily have more than $1,700. The only ones with that would fall under the $1,700 limit would be ones with jewelry and acessories -- obviously nothing you use for financial security. The goal of this act was simple. Reduce the power of the people, increase the control of the government, and restore confidence to the economy. In that aspect, this act was extremely succesful. Do I think we will see this again? I think it is very likely. In fact I think it will come sooner than later if we do at all see it. This act was passed in 1933 during the Great Depression. That is almost 4 years after the Stock Market Crash. However, the reason why our situation is different this time is because of the scale of things. Things are moving much more quickly in today's economy and it is likely that something like this act could sneak up on us. With Congress passing legislation like it's going out of style, we could very easily see something like this sneak up after the break this August. So just be wary, and maybe think again about putting your money in the bank. Those old cooks that hide gold in the yard may not be so crazy after all, so long as you get away with it when the feds come.
This being said, the general feeling right now is that the market is very unstable and still extremely volatile. Stocks going back up to their previous highs would only drive it down to even worse lows. Essentially what will happen is people will wait until they break even and pull out as quickly as they can to prevent any further losses. The air is all too uncertain on Wall Street and even Main Street is starting to realize it. In fact, stocks going up back to their 2007 or 2008 highs could put us back several thousand points within a coulple of weeks down to all new lows for the past 10-20 years (think 1996 or 1997). There is no way that a rally could be sustainable with continued economic reports coming daily proving that the recession is no where near ending. I fear the dollar will start hitting record lows around 4th quarter this year. Then come 1st quarter 2010 it will look like a whole new world (much like 1st quarter was this year). So, I'm not saying pray that stocks will go down but pray for some strong consistent longterm bull moves and some sound fiscal policy on the hill -- as these are the only real indicators that things could be improving. Don't fool yourself with week highs versus week lows. Times are tough, but tricking yourself with false hopes will only make things worse and ultimately will prevent you from preparing for the worst if and when it does come. Be smart and make sound investments, do not rely on Wall Street Gamblers and Printing Press-Addicted Maniacs. Invest in what is valuable to you and your life. You can do this by starting a small business, or by investing in farming, precious metals, etc. Just like when you know a Thunderstorm is coming, you don't run around outside and or worse jump into a pool. Sure the odds of you actually getting hit by lightning are relatively low, but why take the chance? You aren't going to lose much by taking precautions, but you could lose everything if you don't.
 Those that know me know that I'm normally a pretty optimistic guy. But there is a fine line between being optimistic and seeing the glass half full and being delusional. In our case, the glass is not half full, nor is it half empty -- it's just plain empty. America has run out of steam, and that glass has been running on E for so long that it's finally come to a screeching halt. This is arguably one of the worst recessions of the last 100 years, in fact I'd say it ranks about #2. The last time we saw something this bad was '29 and the 50-something month-long recession that ensued shortly thereafter. We are seeing things that we just didn't see in the previous recessions of the 70's, and 80's and even the one right before the dot-com boom of the 90's or the post 9/11 recession. House prices have fallen drastically -- it's important to remember that for the longest time this was believed to be impossible by many banks -- and commodities are soaring. It's never a good thing when all the investments are worthless, and the only real safe investment is the commodity market -- something tangible that you can see and touch. The smart guys have all bet on gold and silver, and if Mr. Obama has his way, you might see another FDR-like version of the Gold Seizure to try to control the value of the dollar as it escapes like air from a balloon. Sure, I'm no expert, but I do have one thing that I've always relied on: my business sense, or rather the more important and not so different common sense. You cannot create value out of thin air. Fake money can only last you so long before you start filling the streets with worthless bills. We are heading for a Depression, and it's worse than the last one. It will be something similar to the Long Depression (the often forgotten and in my opinion much worse Depression than the one we all know). It will be called, the Greatest Depression. Now why would it be worse than the past two? Because the world is much different today. Back then, nobody had thousands of dollars in debt. Nobody had credit cards, or risky retirement plans with their whole life savings stored up in something as volatile as a stock market. People forgot overtime that the stock market was originally a gambler's game. No more safe than putting your life's savings in the hands of a Vegas addict. It was the Wild West brought to the Edacious East, where brothels and burghers met quotidianly. Anywho, my point is this: the depression is here, it's already docked in the port and is unloading it's cargo of fecal matter into our streets with each new economic report. There's no escaping it shy of a new miracle invention, like the cure to cancer or a new energy that would somehow find its way into the hands of American ingenuity (which has since been replaced with more proper American qualities like entitlement, diversity, unaccountability, and national solidarity). And pretty soon the media won't be able to deny it. This is already the longest recession on record since the 30's. Just like they were a year late to call the current recession, they will be late to call the depression. |
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