11-Feb-12 News -- Price/earnings ratio (valuations) trending

[John]

11-Feb-12 News -- Price/earnings ratio (valuations) trending toward collapse



** 11-Feb-12 News -- Price/earnings ratio (valuations) trending toward collapse
** http://www.generationaldynamics.com/cgi ... b#e120211b


Watch out for clueless bozos and paid shills.


** 11-Feb-12 World View -- Suicide car bombers kill dozens in Aleppo, Syria
** http://www.generationaldynamics.com/cgi ... 11#e120211



Political crisis in Greece raises fears of 'social explosion'




Contents:
Price/earnings ratio (valuations) trending toward collapse
Collapsing stock valuations
Ben Bernanke starts to channel Alan Greenspan
What should you do?
World View
Turkey's foreign minister in Washington re action against Syria
Saudi Arabia and Russia accuse each other over Syria
Arab League may seek U.N. General Assembly vote on Syria
Suicide car bombers kill dozens in Aleppo Syria
U.S. officials deny evidence that North Korea's leader is dead
S&P downgrades Egypt's credit rating
Political crisis in Greece raises fears of 'social explosion'
German finance minister suggests a second bailout for Portugal
Some nostalgia about Greece from two years ago


Keys:
Generational Dynamics, price/earnings ratios, valuations,
Ron Baron, Baron Capital, CNBC, Lloyd Blankfein, Goldman Sachs,
Barack Obama, Lee Adler, Law of Mean Reversion,
Ben Bernanke, Alan Greenspan, Princeton University

Keys:
Generational Dynamics, Ahmet Davutoglu, Turkey, Syria,
Hillary Clinton, Russia, Saudia Arabia, King Abdullah Bin Abdul Aziz,
Sergei Ryabkov, Arab League, United Nations, Security Council,
General Assembly, Aleppo, Bashar al-Assad, North Korea,
Kim Jong-un, Egypt, S&P, Greece, Eurogroup,
Jean-Claude Juncker, Lucas Papademos, Wolfgang Schäuble,
Germany, Portugal

[John]

In anticipation, Vince, it's nothing personal. I'm sick and furious
about what's going on, and I feel strongly about it.

John

[Trevor]

Well, there was only so long Bernanke could be optimistic before it started to melt away. What he still doesn't realize is that there is going to be no serious effort to get the budget under control, even if Obama fails to win a second term. We've got a spending addiction, and like most addicts, we won't stop until we hit bottom.

As for what little money I do have, I'm storing it in a small-time FDIC insured bank. I'm not about to take any risks at this point.

When Greece finally does default, I'm wondering if they will follow a similar path to what Germany did in the 1930's and elect a strongman that blames all their problems on foreigners.

[John]

Dear Trevor,

> When Greece finally does default, I'm wondering if they will
> follow a similar path to what Germany did in the 1930's and elect
> a strongman that blames all their problems on foreigners.

I guess I look at it this way: I don't know whether Greece will elect
a new Hitler, but there are lots of countries in Europe, and it's
likely that at least one of them will.

John

[Trevor]

They're already starting to blame the others for the mess they got into. It's not a guarantee, but I wouldn't rule it not. Part of the European theater of war may very well be between Greece and Turkey. They fought before in 1975, but that was a brief, non-crisis war. This time around, it'll be a very different story.

[vincecate]

In anticipation, Vince, it's nothing personal. I'm sick and furious
about what's going on, and I feel strongly about it.

For almost ten years, I've been listening to clueless bozos and paid shills predict "hyperinflation next year," and it hasn't happened, and shows no signs of happening. This prediction is made by two categories of shills:
[...]
Ten years ago, gold was at around $300 per ounce.
[...]
My advice has been the same for years: Preserve your assets. Store cash in your mattress, in your basement, or in FDIC insured bank accounts. If you must invest, purchase short-term Treasuries. Don't risk everything for a couple of percentage points interest.

The cash under your mattress can now buy about 20% less than it could back then. Gold has gone from $300 to $1720. You can understand if I think I am right so far?

For the record, I buy gold from about 100 times as many people as I sell gold to. I have a big poster on the wall next to me where I buy gold with a short summary of my views about gold and fiat money. About 10 lines about how the government is printing about half the money they spend, or about $100 billion per month. How throughout history governments that printed half the money they spent devalued their currencies. How nobody prints gold and gold has been money for 5,000 years. How paper money usually worthless 50 years later. My advice to everyone, as part of this summary, is to try to hold onto their gold if they can. I explain that they can get a tiny bit of interest with their money in the bank for a year but that gold may double again. Gold has about doubled in a bit over 2 years that I have been telling them this.

I do this for several reasons. First, this is a small island and many of the people I buy gold from are people I know. I don't want them to later think I took advantage of them because I knew something they did not. I also do it because I would rather my gold buying and selling last longer and not drop off too suddenly when people run out of gold. I do it because I think my little community will better weather what is coming if more people understand what is going on and hold onto their gold. I do it because I believe it is the right thing to do.

John, the bubble that central banks have created by buying trillions in bonds is in bonds, not gold. Bonds are crazy high when the interest rate on a 30 year bond is lower than the inflation rate. Even Bernanke understands there is a danger of interest rates going up and bond prices going down. Bond prices will crash. Of this I am sure.

The deflation you are looking for is happening in terms of gold. Prices of things measured in gold are going down as demand for the one safe money goes up.

I am concerned that we are headed for hyperinflation and so few people can see it. Nothing personal. I still think you are right about most everything else and enjoy reading your blog every day.

Cheers.