Trend Lines

One of the most important sources in making an accurate analysis within financial markets, is data comprised of trend lines. These graphs chart in detail past and present corrections within markets worldwide, they can give an investor better insight into an extremely important decision making process. One of the most alarming trend lines is the gradual yet consistent depreciation of the American dollar. Over the last decade the dollar has declined 25% and gold has appreciated over 400%. This fact is so important for most Americans because a disproportionate amount of there retirement income is tied to paper assets, most have only a small portion of there portfolios in gold and silver. If this trend continues one could reasonably anticipate a strong acceleration in decline due to our governments quantitative easing policy of late. Any time you have governments printing money, debasing is the net effect. One could assume that the dollar will lose an additional 25% of its value in the next 5-10 years, ad in taxes as boomers retire and begin collecting, and you have massive wealth evaporation. China and other countries are presently stockpiling vast amounts of gold in anticipation of such trends. This will only get worse as the American dollar is replaced as the worlds reserve currency.

Novel Idea

Lets try something new, like taking care of the multi-faceted problems within the boarders of the United States. I think a little NATION BUILDING at home is definitely in order don't you?. Lets cool the jets on dismantling various governments around the globe, and start demanding better decision making processes from our own. How can we afford the fuel for f-16s to fire missiles around the globe when we cant even afford to send our astronauts to the space station anymore?. This weeks revelation that we intend to pay the Russians big money to hitch a ride for the next several years, instead of flying ourselves there is proof enough. We have wasted excessive amounts of borrowed capitol on funding governmental regimes and infrastructure, when the money could be well spent on funding the next generation of young innovators, and taking care of the generation that allowed us the success we now enjoy. Those individuals that claimed that we invaded Iraq for the vast oil reserves were wrong. China's recent contract with Iraq for the future reserves in Iraq is proof of that, and the news that it cost less than 9-Billion dollars adds to further insult to American intelligence. If we start today we can again gain the confidence and respect of other nations, and as Donald Trump says, stop being the laughing stock of the world.

Disaster Will Undoubtedly Spike Commodities

The unexpected rebuilding of the Japanese infrastructure will undoubtedly bolster the price of many commodities worldwide. Things like building materials especially steel, Oil, natural gas, copper will spike dramatically. The United States and other countries will benefit greatly as they strive to meet the sudden demand, on the flip side the American public will have to dole out more for energy, food, and other vital resources. This should contract consumer spending as the middle class goes into a defensive cost cutting mode, and only time will tell if the overall benefits will be to our advantage. Wall street might see the commodities markets eclipse other sectors which have recently seen greater profits, and the bond market will probably see an up-tick in infrastructure tied projects. The Japanese government will spend reserves and borrow more from foreign countries in an effort to finance huge projects, unemployment in japan will plummet to meet the labor demand, and a major portion of retirement allocations will be spent to offset uncovered expenditures. The IMF announced today that there will be no bailout for any Japanese liquidity problems, so we will more than likely be asked to participate in another nation building project. This means one of two things, more TREASURY sales to CHINA or OVERTIME for the PRINTING PRESSES.

Debasing The Dollar

Now that the printing presses are running 24-7 and the Federal Reserves Quantitative Easing policy seems firmly in place, history again has an opportunity to rear its ugly economic head. We have seen it happen to the French, Italians, and others that chose the path of debasing various currency's in an attempt to revive economies. You may ask the question, well if its so detrimental why would the Fed adopt such a position?. There are only so many bullets in our economic arsenal. At the beginning of the great recession we accelerated the sale of U.S. Treasury's to primarily China, Japan, and European countries, followed by massive liquidity infusion into the banking system, and kept interest rates suppressed for an extended period of time. As inflationary pressures expanded in China and other countries, they contracted dramatically on there debt purchases leaving us where we are today. As we print money we flood the supply thus diluting the demand, and in turn debasing is the net affect. We are following a path that the pound sterling has already been down and its not pretty. NOW is the time to slowly back off these policy's, but the central bank and its authority's seems adamant to continue.

Confluence Of Events

The recent earthquake in Japan is yet another real time example of how fragile and vulnerable economies can be worldwide. The Japanese people have endured what most call the lost decade starting in the 1990s as a recession, and to this day has seen little progress in the growth department since then. Today's announcement of an estimated thirty two billion dollars in needed infrastructure cost is a huge factor in Japans ballooning debt crisis. We are experiencing very similar conditions here in the United states from an economic standpoint, and hopefully will not have to deal with any earthquakes of such great magnitude in northern or southern California any time soon. But we can most certainly learn many things from this event and can apply them here in the states. The building codes they have implemented in new construction are bar none, as the limited damage to there skyscrapers in Tokyo have proved. And the damage to multiple Nuclear facility's give us a real advantage in the decision making process of Nuclear power as an energy alternative. A confluence of events worldwide should help us make more prudent future decisions in a number of different areas here in the United States.

Opt Out

Japan has decided to withdraw its support for the most important treaty in the history of modern civilization. Recently they and several other countries made it clear there is no future plans to participate in renewing the Kyoto Protocol on there part, which is due to expire in 2012. This is bad news in an attempt to get all major industrialized nations on board for reinstatement. Setting a price on carbon worldwide is of the utmost importance in transitioning from fossil fuels to the renewable energy sector. As global warming related weather disasters continue to increase worldwide, so does the high cost of natural and economic resources. Global warming could soon trump fiscal ignorance and geopolitical sentiment, as the leading driver mechanism expanding national debt, as countries dump massive liquidity into rebuilding infrastructure to offset these disasters. Mankind has made great progress in recognizing his part in this pivotal issue, now is not the time for complacency or regression.

Bond King Bill Gross Dumps U.S. Treasury's

One day after major-leaguer Carl Icahn decided to give back his investors money due to potential market downside, another huge player in the casino of wall street has decided to (CASH) in his stakes in the form of U.S. Treasury's. The undisputed bond king, Bill Gross manager of (PIMCO) feels that due to the potential inflationary pressures applied by the Feds Quantitative Easing strategies Treasury yields will be adversely affected. I would say he is qualified in his judgment since he oversees the largest bond fund on the planet at an estimated 1.1 Trillion, thus being nicknamed the Bond King. By the way the bond market can be likened to the gasoline that fuels an economy's growth, without it the engine stalls and you have a lost decade effect just like Japan. As we approach the four year mark in the great recession we seem to be tracking or mimicking a similar pattern with anemic at best core data numbers, like sub three percent GDP, high unemployment figures, and commodities and inflation on the rise. The fundamentals just are not there, and we seem to have artificially propped up the stock market just as we did with the banking system. Things will become more transparent when QE2 ends in June and inflation takes hold, just remember economics is math at its purest, its all formula based and interconnected.

Icahnic Indicator

One of the most prolific hedge fund managers ever has decided to give back approximately 1.6 Billion dollars in investors money by April 1st, due to his belief that the current market is so unstable and could quite possibly take a turn for the worse. Yes Carl Icahn, Stanley Druckenmiller, and Chris Shumway have decided to Hedge there bets, sorry for the pun by temporarily, or permanently disconnecting themselves from potential investor losses. With a total past return record of over 104% and 8.7% in the first two months this year Icahn Capital finds this market to risky. It seems to definitely be overvalued, and has run-up to fast to be considered stable. The only solid indicator is that almighty Wall Street has not lost its groove in the bubble creation department.

Derailing Higher Education

Apparently a change is in the works for those that are seeking a graduate degree that will undoubtedly kill the aspirations for many students dream of a Higher Education. Instead of interest being paid back for Federal student loans after a student graduates, it will begin accruing from the first day of there first class, making the total cost outlandish. This type of activity is no different than the corrupt mechanisms developed by the Mortgage Industry to entrap individuals that have no other option in achieving the American dream. Our kids are already under attack by many schools, in the form of unreasonable escalating fees levied by prominent learning institutions throughout the country. This problem is rampant in California where the Board Of Regents is left to spread its systemic fee damage. In turn social unrest has developed at many demonstrations at college campuses throughout the state. These individuals have allowed wealth managers to lose over twenty four billion dollars in endowment money in recent years, and the students, faculty and others have to pay the price for inept investment participation. Recently an estimate of Trillions of dollars in student loan defaults is to be expected in the next decade. Could this move be a strategic hedge against future exposure rates by the Federal government?. If this is the case the shape of higher education will change from one of equal access to all, to only those individuals that come from affluent family's where financial aid is not needed, and students lucky enough to obtain a full ride scholarship.