As American as Apple Pie

Senator, we are all part of the same hypocrisy - MC  

  

 We are a nation of criminals - have been since the beginning. Our founding fathers made their bones thumbing their nose at the (Kings) rule of law. Even today, We celebrate criminals by writing books and making movies about them. It should then come as a shock to no one,  the people who run this country are some of the brightest minds the criminal class has to offer. While the size & scope of their criminal behavior rarely surprises Bagholder, their brazen manner of late (MF Global) is rather disturbing. They steal, in plain sight. No prosecutions, no perp walks, no one held accountable. In the parlance of our time, WTF?   

   Where is the media with explanations as to why some of the victims have been made whole, while others have to feed attorneys to make their claims for justice - a Sisyphusean task if there ever was one.   Where are the regulators  with the criminal indictments - or does the clown who ran the company & his minions get a pass, because he is a friend of Obama. Where is the public outrage over this nonsense? While some of you are thinking OWS movement, Bagholder would suggest there is a substantial difference in outrage between the Chinese guy who stood in front of the tank  and your average OWS protester. 

   Even more disturbing, is the why of all this. Why is JP allowed to cut to the front of the asset liquidation line, seizing physical metal in the process & leaving paper longs holding the bag, so to speak.  Lets be honest here, Jp and their ilk are the Paper Aristocracy who write the rules under which the rest of us plebs have to live. They have the power to loan unlimited amounts of cash into existence.  So, can it really be about the money? They have the political connections to write (and selectively enforce) their own laws. So, why thieve in broad daylight? 

  The elephant in the room is this:  they have not overturned the laws of the universe. As such, the Paper Aristocracy  does not have the power to will physical metal into existence. With that in mind comes this incriminating fact: those with cash in their MF Global accounts have (for the most part) been made whole. In the mean time, those paper longs & persons with actual physical metal on deposit are still victims. .

  The sum total of physical seized might be a few thousand tons of silver. Why would JP even stoop for such a pittance?  Having traded physical metal for decades,  Bagholder is well aware the physical market is stretched tight;  But not so tight, JP would resort to stealing scraps of silver in broad daylight. In the rare event Bagholder has misjudged the tautness of the physical market and JP has been forced to thieve in plain sight  - then the whole thing reeks of desperation. It also means the inevitable silver moonshot  will unfold over the next 18 months. While we believe this to be possible, it is not likely. We here at Mytwocent$ are of the opinion there is only one way JP's behavior makes sense. The MF Global seizing of assets is a trial balloon  for something much larger down the road. The crime itself (of jumping the bankruptcy line) is whats important here. Assuming this goes unchallenged, it becomes the roadmap for future confiscations. The precedent being set here, is the real danger.   

  At this point it should be obvious we live in JP's world. They show up,  in true mafia style, taking what they want. The 140,000 clients of MF Global are forced to squabble over what remains. The JP's of the world play under one set of rules, the rest of us saps are controlled with another set. The hypocrisy is astonishing. It seems Orwell had it right, as some are MORE equal than others. Those playing by the double standard should be exposed. Instead, our MSM seems complicit in the cover-up. Those playing by the double standard should also be prosecuted. But no prosecutions are likely, as the people who run this country are members of a select  lifelong club, all with licenses to steal.  

   With no punishment for their obvious crimes, going forward you can expect more of the same, only on a much grander scale.  The real lesson to take from all of this is to buy and hold physical metal. Futures accounts, brokerage accounts, GLD & SLV are all just paper claims. When push comes to shove, and it inevitably will - those claims will be denied by the Paper Aristocracy. Just ask MF Global clients. Don't be left holding the proverbial bag - buy physical today - while you still can……

  On a completely different note: the parlay of the day is  the Patriots & under 55.5 this Sunday. In the interest of full disclosure & spoken like a true gambler, Bagholder has lost 3 Super Bowls in a row - so I am due!!!

   

Buy or Sell - Homegamers Edition

 Buy or Sell - U S Residential Homes. We here at Mytwocent$ will weigh the facts, one at a time as they relate to the big picture & let the chips fall where they may. The way bagholder sees it, these are the most relevant facts in no particular order:

1. Nominal dollar price -This seems a logical place to start. According to these US census bureau NUMBERS, the median nominal price of US homes has risen every decade. This has held true for the last 8 decades. Its not so much that housing has gone up in value - it hasn't.  Its because the dollars purchasing power is being systematically destroyed. Since Our leaders are spending $$ we don't have like drunken sailors, the printing (devaluing) will not be stopping anytime soon. Throw in the fact that housing prices today are a fraction of prices just five years ago, it seems reasonable to expect higher nominal prices ahead. BUY

2. Gold price - The reason we include the ounces of Gold required to purchase a home is to remove the distortion created by measuring the homes value in depreciating Dollars. Because dollars can be counterfeited & Gold can't; the price in ounces of Gold should give us a more accurate reflection of whether homes are - historically speaking - a buy. Looking again at the US Census Bureau NUMBERS, we see in 1940 & 1980 about 80 ounces of Gold were required to purchase a home. What is interesting about those two years is they both came on the heels of decades with massive dollar devaluations.  The pattern suggests the next bottom will be in 2020 following a decade of massive dollar dilution. Today, it takes 146 ounces to buy a home & its trending lower.  With Gold in a Secular Bull, and homes in a Secular Bear - it seems reasonable to expect the ratio to contract further. SELL

3. Supply/Demand - There is currently an 8 month supply of homes on the market, with many more sitting on the balance sheets of US Banks - just waiting for the market to turn-around. The fact there is a noticeable supply overhang could only mean the real $$ value is lower than todays trading price. On the Demand side, there are millions of people who have been removed as buyers from the housing market, thanks to foreclosures & short sales. Millions more are out of work. It is safe to say, demand is falling. Economic law states, in order to balance excess supply with falling demand - price must go down.  SELL

4. Trend - the recent trend in housing prices is clearly down. We here at Mytwocent$ are big believers in "a trend remains a trend, until proven otherwise". It is very difficult to see anything on the horizon, especially when you consider the supply/demand issues addressed above, that will change this down trend. The only plausible possibility would be massive dollar devaluation. This is the only real card Gman has to play if he wishes to reverse the recent down trend - in nominal terms anyway.  Since trends tend to run longer than anyone believes possible - and the peak of 2005-06 home valuations has all the earmarks of a popped bubble, this points to lower prices ahead. SELL

5. Cost to build - US residential homes are trading today at a fraction of what it cost to build them. On the face of it, that fact seems absurd. Logic would suggest homes should never trade that low.  At a minimum you would expect homes to sell for at least what they cost to build. Yet, here we are today with homes trading at substantial discounts to building costs. Bagholder has been told by his insurance company he has to carry 200k worth of Insurance even though his house at todays market value might be 120k. The reason is the cost to rebuild. It is simply not reasonable to expect this condition to be a permanent one. We will see the day again when homes trade at a premium to building costs. That portends higher prices ahead. BUY

6. Rental income - The amount of $$ a property will produce in Rent has historically gone a long way towards determining the market value of the house. If the spread between what it cost to buy the house & what it can be rented out for gets wide enough - then well capitalized investors will step in and bid up the property price to help close the gap. Arbitrage 101. Five years ago in Phoenix a 200k house would cost you $1100/month to buy & would rent for about the same. Today, that same house cost 100k (or $550/month). The rent that place will bring has increased slightly thanks to the large quantity of people who have been foreclosed on & thrown into the rental market (because they don't have the credit to buy). The spread between current rental income & buying price is as wide today as bagholder has ever seen. This too portends higher home prices ahead. BUY

7.  Taxes - While property taxes are an afterthought to most folks purchasing a house, they shouldn't be. Do you ever really own the property if you have to pay Gman 2-3-4-5% of its value every year?  Bagholder has watched the value of his home get whacked in half the last few years, yet his property taxes only went down 9%. The problem is taxes are only going to go up over time. Raise them high enough, relative to the value of the property & nobody will want to buy them. Case in point, Detroit - where the median home cost only $6,000.  In many cases they cost less, all that is required is you getting current on the taxes. As municipalities struggle for revenue, its only a matter of time till they raise taxes - again and again. If they raise them high enough, like in Detroit, demand will be non-existent & home prices will fall. SELL

8. Median wage - while this might not seem relevant to median house price, there is a connection. It speaks to what working man can afford. In 2010 4.4 years median wage would get you one home. That is over double the time required to work to purchase a home in 1940, 1950, 1960, 1970, 1980, and 1990 - and 1/3rd higher than in 2000.  In terms of hours worked & wages paid, housing prices are the highest they have ever been. We have to work more hours than ever before just to afford a median home. It does not seem reasonable this trend could persist much longer. Which means either wages paid will be going up, or house prices going down. Since wages going up is not likely anytime soon that leaves house prices heading lower. SELL. 

9. Interest rates - This is the proverbial sword of Damocles. It hangs over the Real Estate market like impending doom. Eventually Interest rates will rise. When they do, the purchasing power of home buyers will evaporate. The effect will be a complete collapse of the bid underneath the residential home market.  The powers that be know this to be fact. This is one of the reasons why they have been holding down interest rates below true market levels (propping up the bond market is another). Like a beach ball held underwater, microscopic interest rates are not a permanent condition. When those rates turn up, and they will eventually - home prices will get crushed. SELL

10. Bankers Position. As far as financial savvy goes, Bankers are a crafty lot. They rarely lose. With that in mind - bankers are Long residential homes - like never before. Not only are they Long - they are withholding supply from the market. This behavior suggests they are looking for higher prices down the road. Of course, this logic is only sound if the Bankers intentionally built their Long position. What if bankers are victims of their own greed and they were trapped into their long positions. If thats the case, lower prices may lie ahead. You can make a case for both higher  & lower prices ahead, based on the the behavior of those in the financial know. This is a tough call, but Bagholder just can't see bankers as victims. He believes they built their position intentionally and this fact points to higher prices ahead. BUY 

    These are the 10 most important considerations Bagholder can come up with in determining the direction in which US house prices are heading. According to my math, there are 4 Buys & 6 Sells.  This certainly does not give us anything definitive, unless of course you weight some of these facts as worth considerably more than others. For instance, Bagholder believes Interest rates to be the strongest sell argument & Bankers position to be the most compelling Buy argument.  Also, had we looked at these 10 facts in 05-06,  9 of 10 were a sell. The recent pullback in price has turned four of these facts bullish.  Bottom line: even if residential homes are not a buy right now - they are certainly moving in that direction. Thoughts?

Game Changers

Where is the outrage? 

  In the past week  our Congress has passed legislation (and Obama signed) that permits the US Military to detain whomever they wish indefinitely including US citizens on US soil; provided they think you may have terrorist ties.  In one fell swoop, they have effectively eliminated HALF the Bill of Rights for US citizens. Bagholder can't be the only person who sees the National Defense Authorization Act (NDAA)  as a game changer.  

4th amendment is now Gone - no more judges signature required to detain people, invade their homes & and seize them or their property. Of course, they are required to think you have terrorist ties - before they do any of this. 

5th amendment, Due process is now gone. In fact, how about NO process. They can deprive you of liberty and property as they wish. Of course, they are required to think you have terrorist ties - before they do any of this. 

6th & 7th amendments, your right to a speedy jury trial is now Gone. Nothing ambiguous about the word "indefinite", which is how long the new law allows them to detain you before you see the inside of a court room. Of course, they are required to think you have terrorist ties - before they do any of this. 

8th amendment, restrictions on cruel and unusual punishments are now gone. We can be whisked off to Guantanamo for Big Bob's cockmeat sandwiches whenever Gman decides we need it.  Of course, they are required to think you have terrorist ties - before they do any of this. 

   The puppeteers have grown weary of having the masses enjoy sanctuary within their homes. They no longer want to be compelled to provide us with our day in court. Thats all been replaced with the NDAA. While many of you are thinking Gman has no intention of abusing their new powers, Google Jose Padilla. Gman was a wee bit upset about the people pointing out his illegal treatment of Padilla - so they have simply legalized the treatment. 

   Ther NDAA is arguably the single most important piece of legislation passed (as they have gutted the bill of rights) in the history of this nation, and there is irony in that it merits 20 seconds on the ten O'clock news in between a story on an old couple who got mugged at their ATM - and doctors who scammed medicare for non existent procedures totaling  21 million dollars before finally getting caught. The decision by the local news to sandwich the reporting of NDAA between 2 other crimes on humanity, is very telling.   

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  The second Game changer we will discuss is MF Global. For those living in caves, MF Global was a futures trading firm. They had approximately 140,000 clients with futures accounts. The futures market is not like the stock market. When you buy a stock for $10 and it goes to $20, you make $10 and nobody loses. Futures are different in that every dollar made comes directly out of someone else's pocket. Thanks to lousy management investment decisions, MF Global was forced to claim bankruptcy.  

   In a normal corporate Bankruptcy, clients are made whole first - then creditors & bond holders - then stock holders.  What makes the MF Global story a game changer is they are effectively altering the order of who gets made whole first. The bank (JP Morgue) which was on the other side on MF Globals losing bets, has arbitrarily decided to seize the assets inside the accounts of MF Global Clients. In effect, they are cutting to the front of the line. 

   Jim Willie, aka the "golden jackass" theorizes the Morgue gobbled up MF Global to avoid having to deliver physical on their precious metal paper shorts - which was slated to begin the next day.  The timing IS impeccable. There are other incriminating facts as well which support his theory. Many of the clients with accounts at MF Global were among those who were in line at the comex window looking to take delivery of their Gold & Silver, when MF collapsed. JP was the bank who was going to have to deliver physical metal to those MF clients. Instead, those MF clients have been locked out of their accounts - many with existing open positions they can't access (in the futures world, that means unlimited potential losses). Even more disturbing, is JP registered deposits of physical metal into their vaults equivalent to the amount of metal missing from MF global client accounts. If I'm on a jury - thats enough to convict.

  One of the primary reasons the US is the global power it is today, is because of the rule of Law. We have rules in place designed to protect the masses from the predatory behavior of the JP's of the world. There are really only two possible scenarios from here. The powers that be will make those clients whole - or the system is broken. Either we have rule of Law here, or we don't.  If they can seize 140,000 futures accounts, why not 1/2 million mutual fund accounts, or a couple million brokerage accounts? 

This is a very dangerous fork in the road we stand at today. Bagholder is optimistic in that he believes those clients will eventually be made whole, those running MF Global will be Perp-walked, and JP will cough up the Silver (or default officially). Stay tuned.

Poems Everybody, Poems

Poetry is nearer to vital truth than history. - Plato

  Bagholder has always had an affinity for Poetry. Expressing complex thoughts, with a bare minimum of well chosen words can be one of life's great pleasures to behold. Some of the best poets of the last half century have utilized their talents writing lyrics for music. Rocknroll, rap, country - they all have their share of poets. A good poem, just like a good piece of Art, is subjective. The best works speak differently to different people, depending upon what they choose to see.  Todays blog will discuss one of Bagholder's favorite (because of its elegance & simplicity) obscure rocknroll tunes from the 1980's, along with some of the many plausible interpretations. 

There is unrest in the forest, There is trouble with the trees, For the maples want more sunlight And the oaks ignore their please. The trouble with the maples, (And they're quite convinced they're right) They say the oaks are just too lofty And they grab up all the light. But the oaks can't help their feelings If they like the way they're made. And they wonder why the maples Can't be happy in their shade. There is trouble in the forest, And the creatures all have fled, As the maples scream "Oppression!" And the oaks just shake their heads So the maples formed a union And demanded equal rights. "The oaks are just too greedy; We will make them give us light." Now there's no more oak oppression, For they passed a noble law, And the trees are all kept equal By hatchet, axe, and saw.

 Could this be a statement on Republicans (Oaks) who have it all, taking advantage of the poor underprivileged Democrats (Maples)?  The analogy seems perfect when you consider that maple trees need shade to survive, whereas with uninterrupted direct sunlight (which they clamor for) they would die. Life is no different, as Democrats aren't happy unless they are taxing those who produce; and heaven forbid  they ever get the complete control they clamor for, it would literally - kill the country……Or  

 There are a lot of parallels to the feminist movement of the 1970's. Women (maples) scream for equality, while men (oaks) can't understand why women jus don't accept their role - and "be happy in their shade".  The feminist movement, like the maples,  was screaming for something they really didn't need/want.  They fought for the right to abandon their traditional role of stay at home & raise kids, in favor of slaving 40 hours a week for some green paper.   It is difficult imagining any rational group of people wanting to make that trade, let alone marching on DC to get it done……Or

  Could this be a statement on civil rights and the whites (oaks) oppression of the Black (Maples) searching for equality (light). The civil rights movement was a "noble" one, was it not?  The hatchet, axe & saw are the implements of equality in our poem. In the real world, the tool of implementation is  Affirmative action. While the intent was noble, you cannot legislate morality.  Consequently, society (the forest) as a whole is worse off……Or   

 Is this poem an allegory on the failures of communism's never-ending quest to ensure equality for all? History has shown repeatedly, any efforts to create equality where none exists naturally  is destructive for all involved.  True to marxist dogma, the trees are made equal by cutting down the strong. As a result, there is no more rich in the forest, only poor. 

  While republican/democrat, male/female, black/white, rich/poor are all reasonable interpretations of the oaks & maples.  We here at Mytwocent$ believe these are all  false dichotomies created for the sole purpose of shifting focus away from the real enemies, on to false ones.   In every case the two combatants have more in common with each other than they dare admit, all the while the real threat goes unnoticed. It is textbook divide & conquer strategy executed perfectly by the kleptocrats running this country. They keep the masses squabbling over petty differences, as they go unnoticed pillaging the planet. It truly is, poetry in motion. 

Harmless Idolatry

Bagholder can remember the exact moment in childhood when he first realized, that while the world (in a physical sense) may be black & white, the people within - are Gray. Butch Cassidy & the Sundance kid were to blame.  They are such likable guys, yet they are criminals. Therein lies the rub. It is a bit of a psychological epiphany as a child to realize:  not all bad guys wear black, not all good guys wear white, and of course, all people are a mix of both good and bad.  From the moment Butch won a knife fight - without a knife - Bagholder has had a morbid fascination with Bad guys. What follows are my top ten villains with whom I hold a strong personal connection, despite the fact they are all cold blooded murderous psychopaths…….  

- Jack Torrance. The appeal of this character is he is very much an ordinary guy, who slowly descends into insanity. He is no mastermind, he is not an egomaniac, and he is not an arch criminal. In fact, nothing in particular turns him into a cold blooded killer.  His is more of a slide into the abyss which is so gradual - its almost as though it could easily happen to you or I. 

- Lex Luthor. Hackman's version of Lex in the Superman movies was a delightful mix of megalomaniac, egomaniac, and haughtiness. Most of the names on this list have oversized egos - but in that regard this guy is in a class by himself. Egomaniacs are a joy to behold, precisely because they are their own worst enemy. This life requires balance - the Lex Luthor types have none in their world. Its really inevitable that he does himself in. 

- Lord Vader. There was no bigger bad-ass on the planet in the late 70's. He was a supremely gifted, yet lost soul unable to properly harness his talents. Worse yet, he fell under the auspices of someone more capable of harnessing (and utilizing) those natural gifts.  The Black robe & mask helped conceal Lord Vaders  internal struggles, while also magnifying his image as a badass. His direct, concise, efficient means in achieving ends is the stuff of greatness. 

- Michael Corleone. A man of few words, and fewer actions - but those actions spoke volumes.  His cold, calculating, ruthless manner and an razor-sharp insight into human nature Kept him two steps ahead of his enemies. He was not a particularly good soldier, but he was a helluva General. A true "big picture" guy. 

- Omar Lyttle. You just have to love someone who beats the scum of the earth drug dealers at their own game - and doing it with a code. Like Omar said: "Yo, never hurt nobody, wasn't in the game". Unlike the others on this list, he only killed to survive. To some, that makes him morally superior. Its funny, a lot of what he was able to do - was because of his reputation and the fact he understood the threat of violence is always stronger than its use. 

- Paulie Walnuts. A complete moral reprobate, if there ever was one. Mafia Killer with the same intellect, same wisdom, and same hierarchy of needs as the average 8th grade male. His most endearing quality is he sees the world as black and white - much like a kid. He is particularly interesting to watch because he has NO scruples & life is gray.  

- Kahn - There should be a picture of this guy in the dictionary under ambition. Exceptionally intelligent, well educated, genetically superior and yet unable to govern several of the deadlies (primarily pride and wrath). It seems fitting that despite all his genetic gifts, his unchecked ego was his downfall. He was truly, a worthy adversary for someone (Kirk) cruising the cosmos. 

- Tony Montana. There is something to be admired about someone who works their way up the food chain one rung at a time. Unlike Michael Corleone, Tony was a better soldier than a general. His problem was he didn't know any limits - in anything. Still, you have to admire someone who knew what he wanted & went out and got it. 

- The Joker.  His is perhaps the loosest grip on reality - but I'm not one to hold that against a guy.  For all his faults, he did know how to have fun. Like any genius, he had a way with words and was most fluent in sarcasm. To me though, the real draw of the character was his irreverent manner and the fact he thought BIG.  He had a natural gift for forcing people outside their comfort zones - one of Bagholders favorite pastimes. 

- Dexter.  An excellent tactician, who does his homework, and executes with extreme cunning - thats a dangerous combination. He is A true predator. He channels his inner demons towards ridding the world of his fellow predators. It is seemingly a noble goal, executed in a manner that is both righteous and just.   Whats not to like?

How many times you gotta be told?

  Corporate America just wasn't for me. Bagholder's lone venture into corporate America was as a teenager (pre-internet days) working at a call center for a major Hotel chain. In a 40 hour week we would routinely handle 4000+ phone calls to get about 800 reservations. In those days, average room was $50 times 800 reservations meant each agent routinely typed up $40,000 worth of business per week while getting paid about $400. As a corporate drone, I dreamt of ways to turn those 4000 calls into $40,000 for me, instead of a faceless corporation…. 

 As luck would have it, Bagholder was working on that very problem one Friday in September just before week 1 of the NFL football season when the phone rings. Guy with a heavy foreign accent says "bet the Broncos" - and then hangs up. Most folks I know would just dismiss the call as a prank, Then laugh Sunday night when they happen to notice the Broncos won. Oh well, life goes on….

 Week 2 Friday night, phone rings again - guy says "bet the Vikings" - and then hangs up. Anyone who has been on this planet for more than 10 minutes knows "If the world tells you something, you listen". Bagholder goes long the Vikings right here. Most normal folks at this point, would still dismiss the call as as a prank - but make no mistake; they will go looking for that Vikings score on Sunday.  Sure enough the Vikings win.

 Week 3 Friday, phone rings. At this point most folks would begin looking the gift horse in the mouth - with something like "WHO IS THIS?". But the voice says "Bet the Raiders" & hangs up.  Most folks would still do nothing, but a healthy percentage of people would find a way to get a Benji or two down on the Raiders. Even the ones who don't bet will keep an eye on the Raiders - who of course, win. 

 Week 4. If you are like Bagholder, come week 4 you are sitting next to your phone waiting for the call. It comes with the words "Bet the Browns". Anyone who bet week three will be upping the sperm count this time. Those who didn't bet week three have to be questioning themselves. Some of those will rationalize along the lines of : This guy has been right 3 weeks in a row, I should try it. Browns win.  

 

 Week 5. There are people I know, who after being handed 4 winners in a row, would be emptying their checking accounts (fck the mortgage) after the phone rings with "bet the Rams". To be fair, there is a large percentage of people at this point who would still not bet the Rams, for a myriad of reasons - most of them psychological. Maybe they don't have gamble in them, or they are to lazy to make a bet, or perhaps they just do not believe. No matter, Rams win.

 Week 6 Call comes "bet the Colts". Those emptying their checking accounts last week are now paying their mortgage AND pounding the Colts. The ranks of the non-believers are shrinking as more and more people, after being told 5 times in a row, begin to listen.  Think about most men you know and how they would react in this situation. After being given 5 consecutive winners half the men I know would be betting the Colts - many of those would be wagering $$ well outside their comfort zones. Its OK, because Colts win.

 Week 7 Call says "bet the Lions". Many guys, including yours truly, would be booking suites at Caesars Palace by week 7.  Meanwhile the non-believers rationalize away the pain of lost opportunities with thoughts like: This is not possible, nobody could have information like this, why are they sharing with me, this is crazy, etc… Then again, how many times do you, as an individual, need to be told something before you listen? five, six, seven?  …. Oh, Lions win.

 Week 8 By now, there are some people to whom that Friday night phone call is a Religion. Their worlds revolve around that voice on the phone which says "Bet the Eagles".  Some folks I know would be doubling up their bets every week, while others would now be emptying their brokerage accounts for wagering capital. Meanwhile the non believer pool shrinks some more as all but the most stubborn non-believers start to listen and bet the Eagles.  Eagles win.

 Week 9  Phone call comes, guy says "I've given you 8 winners in a row, I can't carry you forever - this is the last winner you get for free. Next week you wire me 10 grand or we don't talk again. Got it? Now, bet the Jets." The non believers are screaming "I knew it, its a scam, they just wanted my money". While all that may be true - the voice gave 8 winners in a row. In short, he produced. In fact, make that 9 as the Jets win. 

  At this point there are a couple of questions which need addressing: 

What week would you climb on board?

Would you wire the money for the week 10 call? 

 For the record, Bagholder would wire the 10k.

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   While you might think the above scenario could never happen, all that is required is a devious mind willing to make exactly 4096 phone calls week one - telling half to bet the broncos & the other half bet their opponents. Because the broncos won, come week 2 you call only the 2048 people who were tipped the "broncos" and tell half to bet the vikings & the other half to bet their opponent. Repeat until after week 9. By then you will have handed 9 winners in a row to 8 different people (some of whom have elevated you to GOD status). Assume 1/2 are astounded enough to cough up the money for a week 10 pick, and that is how you turn 4000+ phone calls into $40,000.  

Disclaimer: Do not try this at home…. For the record, the above tale is complete fiction - bagholder knows nothing about the list of 5000 Gamblers Anonymous members whose phone numbers went missing back in the 80's.

Debt, a four letter word indeed

There are two kinds of people in the world my friend, those with a rope around their neck, and those who do the cutting. -tuco

 There are parallels to be drawn from Tuco's words of wisdom. The spiraling out of control national debt is the noose threatening to hang us all. While those in charge of the cutting, our elected leaders, seem oblivious to our plight.

After months of wrangling between Obama & both houses of congress,  there has been a deal struck to raise the debt limit. This means we, as a nation, can go on spending money we don't have - it just goes on the federal credit card. It is the 70th time we as a nation have had our "limit" increased. Seems kind of silly to call it a limit really.  Could you imagine reaching your mastercard limit, then asking for an increase, and getting it - 70 times? 

 The agreement reached, like all good compromises,  has nobody getting what they want (need), but everybody getting a little something. Democrats get the next debt limit showdown moved until after the next election. Tea party gets no new taxes, Republicans get - well - their way, the masses get assfucked, and Gold & Silver Bulls make Bank - with a capital B.

  The   United States is the mathematical equivalent (with 8 zeroes removed) of  the guy who makes 24 grand (2.4 trillion revenues) per year while spending 39 grand (3.9 trillion budget) - Oh and his net worth is negative 150 grand (15 trillion debt).  The situation is simply not sustainable. Yet here we are. As anyone who has managed household budget would tell you, the first step is to get the spending under what you make - then tackle the debt. 

  So, after months of wrangling how do our leaders, ostensibly our best and brightest, approach this problem? The village idiots, I mean congress  decides to spend 37 grand rather than 39 - and then celebrate as though they are conquering Roman war heros returning home for the Bacchanal.  Instead of cutting spending in half, like is commensurate with the problem - we get token cuts. The kind smarmy politicians can show their constituents as proof they are addressing the spending issue. Like my dear departed dad would say, It ain't worth being the village idiots, unless you can prove it. 

  Meanwhile back on Earth, the real issue (the debt) continues to grow, unabated. In fact, they have agreed not to address the issue again until after 2012 election.  Our  political leaders are not serious about addressing the spending deficit. Which means they are not serious about addressing the debt either. So, if getting spending under control is off the table; then inflating (printing) the currency and/or default is all that is left.  

  Make no mistake, until our political focus changes - gold will head higher. In as much as our leaders have decided to print more currency - seemingly until we run out of trees - Gold bulls are the only real winners from today's deal as we recognize the US dollar and the political charade with it for what they are;  a currency in collapse and an empire in decay. Like Tuco might say, there are 2 kinds of people in the world my friend, those who get it (and buy gold) & those who don't. Which one are you?

Play, or get played

 The life of Wimpy from the popeye cartoons just wasn't for me.  He was part of the reason I have always been a saver. Saving used to be easy when I entered the workforce 30 years ago.  My local bank in 1981 offered 30 year  bonds (to build a toll road) worth a  million dollars at maturity (about now) for 15 grand.  Now that was a tradel!!!  Even more amazing, is nobody wanted them. Conventional wisdom at the time was inflation will eat up the value of your savings and/or Gman will welch on the bond payoff.

  My parents,  relatives, teachers all thought that way. The compelling math (15 grand to a million), as presented by yours truly, didn't matter to them. What did matter, was a decades (1970's) worth of watching prices rise quickly  & the US dollar purchasing power fall dramatically.   As It turned out, locking up money long term at those double digit interest rates in the early eighties was arguably the single best trade to have made in any asset class  that whole decade. It should come as no surprise to anyone who understands the "great game", why that trade was universally despised at the time. 

   Most regular folk in the investing arena spend their time trying to spot the next trend into which the herd will stampede. If we are lucky to spot it early, have the nuts to get in, and the conviction to hold tight - the masses will pay us off when they decide to pile in - thats the goal anyway. For a select few however, its not about spotting the trend - but rather creating the trend.   Thats the gist of the "great game" as played by the uber-wealthy (Warburgs & Rockefeller's, etc).  Because this is their world, and we are just living in it - they actually create the circumstances that leads to the conventional wisdom which conditions the masses to lean the wrong way.  

  The great game is played best if 99%+ people are on one side of a trade, while a select few are on the other side. Wealth is easy to multiply under those conditions. So the question for the financial elite is how to get 99%+ on the wrong side of a trade. Well, even a fool doesn't need to touch a hot stove more than 3 or 4 times to know its going to burn. So the banksters throw 10 years of sharply rising commodity prices at the masses in the 1970's.

  The result was to condition the masses to believe they were best off storing their wealth in commodities (like Gold & silver). So, the whipped public scraped together what cash they could and threw much of it at the metals in the early eighties. The banking elite was happily taking that cash for metals & locking up all the bonds they could at those double digit interest rates. As usual, the banksters had it right & the masses were destroyed. 

Fast forward to today, a 30 year treasury worth a million dollars at maturity (in 2041)at prevailing rates would now cost north of 450k!!  As odd as it may seem, now everybody wants them. For the last 30 years people have been conditioned to believe there is nothing safer than US treasuries.   Today, pension funds, foreign countries, hedge fund managers, retired folks, you name it - they are ALL on the long side of the bond trade.

  Once again, the financial elite have everybody leaning one way. Todays bond markets (everyone is long) and precious metal markets (everyone is sold out) are so lopsided - multiplying your wealth the next 10 years is childs play.  If you understand the "great game", you know the conventional wisdom was created by the financial elite - for the purpose of getting everyone on the wrong side of the trade.The hardest part for normal folk is dismissing that conventional wisdom of "Bonds are safe" and "Gold is risky". We here at Mytwocent$ admire the diabolical genius of it all, really.

   

The banking elite know that if they hit the masses with a decade of sharply rising prices - like they did in the 1970's - the bonds everyone is paying 450k for today will plummet. Will they go all they way back down to 15K? Its certainly possible, even likely. Today's conventional wisdom of "safe" US treasuries will gradually give way to the same fears that gripped everybody in 1980. It won't matter how high interest rates go, because nobody will want anything to do with bonds after the upcoming devastation. At the same time the bond bubble is pricked - the masses will begin looking for places to stick their rapidly depreciating dollars. This is where Gold & Silver go parabolic. 

 If you want to multiply your wealth, just like the banksters do - you will need to be long Gold & Silver before the pricking of the bond bubble. That way you are in before the masses start looking to get in - its really that simple.

  Still not convinced? OK. Guess who was buying those precious metals at generational lows all thru the 90's & early 2000's. Yep, the banksters. They loaded up on gold at $300 & silver at $4 for 15 years!! Greedy bastards, they are still buying today. They got long metals at fire sale prices in preparation for the upcoming bond market rout. Once the masses are scared out of their bond holdings like they were in the seventies, the financial elite will be there to dole out their metal hoard a little a time at prices that are multiples of where they trade today. The banksters  are looking to scoop both sides of both trades (bonds & pm's) just like they did in the early eighties.  

That is how winners play, and its the essence of the Great game. You are either pitching or your catching - there is no middle ground. If you are going to play the great game - you best do it like the banksters. They understand, its a rigged game - they do the rigging. Once you come to the same realization - that its a rigged game - investment decisions like dumping bonds and getting long physical Gold & Silver right NOW become no brainers. 

What is your kingdom worth?

So you own a business - thousands of employees - highly profitable - Customers can't get enough of your product.  Then  one day Tony Soprano & his crew walk in, look around, tell you how much they like the place. They inform you they are in the business of making sure business's stay open - wink wink. 







Tony smiles and says:

 "hey, we have the same accountant - I noticed you made a lot of money  last year after expenses - and because we know you want to stay open - we think you should give us 75% of it as a - you know - insurance against a complete work stoppage - if you know what I mean". 

You think about your alternatives, and reason its best to just pay Tony - and maybe he will go away.  

After six straight years of handing Tony 3 out of every 4 dollars you make - you muscle up and tell Tony its time to renegotiate. Tony says: 

"Yeah, I was thinking the same thing - Us taking 3 out of 4 dollars you make - just doesn't work for us anymore - now we want 5 out of 6". 

 As the owner of that business, if your only choices are pay him - or close up shop - what do you do?

While you ponder the answer to that, here are some facts about the current NFL labor dispute: 

1. The NFL is just under a $10 billion dollar a year business

2. 4 billion comes from TV rights, 6 billion from Gate & Merch

3. The expiring contract had revenues split 55/45 owners/players

4. The owners still have to pay coaches, stadiums, merch cost, refs, equipment, Insurance, taxes, and the day to day expenses out of their 55% - while players pay none of it. 

5.   The owners claim those things cost 4 billion of their 5.5b share, leaving them about 1.5b. 

6.  So, players take home $4.5b, the owners get $1.5b, stated another way 3 out 4 for the players - the way it stands today.  

7. The players are looking to get their end raised to 50% 0r $5 billion, leaving the owners to get $1 billion.

8. In other words, the players are not content  with 3 out every 4 dollars in after expense revenues, they want 5 out of 6 instead. Just like Tony Fuckin Soprano.

  As you can now see, there is NO significant difference between the Soprano business shakedown & the NFL labor dispute. The numbers are the same.  Admittedly, its difficult to feel sorry for Billionaire NFL owners - but it is their kingdom at stake.  

  With the players getting 3/4 now, it seems the players are already over paid.  This is why the owners are willing "to go to the mattresses". Their pockets are deeper, my guess is their resolve is deeper also. They will tell Tony, I mean the players to go fuck themselves, The owners will get what they want - a larger overall share. 

To put a number on the current gap, the two sides are about a billion apart. If they each give about half - you are only talking about 5% of revenues . Seems silly, either side would flush a whole season over 5% of revenues.  

  We here at mytwocent$ are of the opinion cooler heads will prevail. A deal will get done without any loss of regular season games. There is simply too much $$ at stake. When the deal is struck, both sides will claim  victory by pointing to different parts of the deal. For example, they could up the players share to 4/5 - if the owners get revenue deductions for stadium costs. Both sides could claim victory.  In fact, they should throw the fans a bone too - can you say 18 game season?  

Are you ready for some Football - Or what?                                                            

Lies.... Part 3

All great truths began as blasphemies - GBS

7. There is a pill for what ails you. In times past medical treatment was reserved for those with serious health issues. Now the medical industry has mastered the art of cashing in on imaginary health issues. They take benign everyday human frailties and reclassify them as  disease. This has the effect of conditioning unsuspecting consumers to think of themselves as victims in need of medical attention.  The medical industry is no longer in the business of diagnosing and treating. Considering there are 9 million + US kids currently on behavioral meds, It seems the medical industry is in the business of absolving countless people of their parental responsibilities, while at the same time inflicting the youth of today with built-in excuses for failure. There are no more unruly undisciplined kids, just kids who suffer from hyperactive disorder - or whatever they are calling it these days.  Its not just limited to kids either…. feeling depressed?….Can't get a boner?…..shy?…..trouble sleeping?   …. 21st century medicine has a pill for you!!!  Oh well, a people are easier to control when they are drugged.   

8.  Obama is a lock in the 2012 election.  As lies go this one also is a Jedi mind trick as we are being told what to see.  "these are not the droids you're looking for "  translates today as  "No Republican can compete with Obama". The msm has projected an Image of invincibility around Obama for months now.  We have had an entire generation raised on the aphorism "image is everything". In reality however,  Image is nothing, this is a deeds world. Checking Obama's deeds we see: instead of 2 wars we know have 3..... Guantanamo - still open for business..... His tax policy was to extend the Bush tax cuts..... Instead of 1/2 trillion deficit, we now have 1 1/2 trillion.  I  guess we could file Obama's change under "Meet the new boss, same as the old boss".  Toss in the highest unemployment since Carter and a still burning real estate market - and this guy could lose to a cardboard cutout. 

9.  Your vote counts.  It was Stalin who said "It doesn't matter who votes, only who counts the votes".  Here in America, when we vote we mark cards - which get fed into a machine. Is that really voting - Or are you playing a video game? Even if they are not rigging the vote counts, the game itself is still rigged as there is no signifigant difference between D & R. Of all the lies this one amazes me the most because of the sheer number of people taken in by it. Exceptionally bright people truly believe there are significant differences between the 2 major parties.  In reality however, They are simply different breeds of the same parasitic species. Every election cycle we are presented with a choice of D's & R's. Considering both spend like drunken sailors,  they both are in bed with the suits on wall street, and they both grow the size of Government -  not much of a choice, is there? The impetus for this lie is obvious as when people are presented with choices they feel empowered.  I guess it still works even when the choice is only an illusion.