Vigilant Investor

We’ve monitored David Morgan for years. He’s been as right about the economic situation as we’ve been since our start in April 2005. Give it a watch.

It doesn’t get any more rich than this… Cramer on there being no housing bubble!

Goes to show how off base pop culture economic analysis can be. Don’t forget how the media earns its living: Advertising. Throwing a wet blanket on the bonus party on Wall Street is not going to be promoted. They’ll cover it as it happens and in retrospect, but they’ve give guys like this 95 more times the coverage, and laugh off the critics.

Here’s part II
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“…but wanting to have their ears tickled, they will accumulate for themselves teachers in accordance to their own desires”.
– II Timothy 4:3

Glen Beck’s observation on all the hate mail he receives when he would talk about the bad things going on in the economy in 2007 are valid. For better or worse, folks don’t like a wet blanket at the party telling them that there’s going to be substantial consequences in the hangover (or worse) department from all the excesses. No, when it comes to bubbles, people would rather party on until they crash.

Here we are nearly 6 months after this excellent Glen Beck interview with Michael Panzer and Peter Schiff, and a majority still can’t contemplate how severe the situation is. The interview is as relevant today as it was in September of 2007. The part about U.S. economy vulnerability is crucial, especially when you consider the threats of, say, Chavez in Venezuela to cut off shipments of Oil to the U.S.

A classic worth a repost.

Yale Professor Dr. Robert Shiller was one of our key sources several years ago who helped us be well ahead of the curve on the real extent of the housing bubble. Here he is being interviewed about how dysfunctional the housing situation still remains.

Its still the early innings, folks. Think it through!

Philip Manduca, who co-manages $2 billion as head of investments at ECU Group Plc, says “another death lunge still to come.” His arguments are close enough to give them a listen, especially on the Fed’s additional .50% rate cut and the consequent risks of inflation, currency weakness, and, generally speaking, the impending payback for years of free lunch Ponzi finance.

Give his interview with John Dawson of Bloomberg a watch here.

How bad is it for housing? 60 Minutes provides a decent postmortem on the entry into the housing crash… If only they could haven warned people when it mattered –before it collapsed, like we did! The only thing missing is any revelation of where all this easy money came from. That answer is the Rosetta Stone of where we are in this crisis.

This piece truly puts a visual on the breadth of this crisis. One gentleman walking Steve Kroft through foreclosed properties when, towards the end of the piece, he thinks we’re lucky if we’re through the first 40% of this. Too bad the problem will not remain contained only to housing. As the monoline insurers backing many of the bonds continue to run into liquidity issues (e.g. Ambac, MBIA, and ACA Financial Guarantee) collide with the emerging problems in commercial and retail real estate, as well as those coming to the surface in revolving credit — credit cards, auto loans, etc. — we think 40% is a bit too optimistic.

As Jim Grant points out about all the assurances that this situation would remain “contained in subprimes,” and then “to just housing,” at best we can expect this will remain contained to planet earth.

Here’s a decent clip that shows the debate is changing on the Federal Reserve as both Ron Paul and Jim Cramer discuss the fallacy that is the Fed. Tipping points are critical junctures where one paradigm closes while another opens. Such shifts can be dramatic.

As for our video, just five years ago you’d never hear a discussion like this hit the airwaves, and if it did, it’d be lost and forgotten as soon as the broadcast ended. Not so any more. As the markets digest, things will change.

Here’s a clip of Prudent Bear’s David Tice explaining why he thinks the markets are in a free-fall to Bloomberg T.V.

Here are the headlines:

Stocks Dive on Worries of U.S. Recession; Wall Street Unassuaged by Fed’s Interest Rate Cut

Wall Street plunged at the opening of trading Tuesday, propelling the Dow Jones industrials down about 400 points after an interest rate cut by the Federal Reserve failed to assuage investors fearing a recession in the United States.

Asia Stocks Fall, Extending Global Slump as Bear Market Spreads

Asian stocks plunged for a second day, sending the region’s benchmark to its biggest decline since April 1990, on concern the global economy is slowing.

Asian Markets Extend Losses Amid Worries That US Is Headed for Recession

Global stock markets extended their shakeout into a second day Tuesday, plunging amid worries that a possible U.S. recession will cause a worldwide economic slowdown. The dramatic declines were expected to spread to Wall Street, where stock index futures were already down sharply hours before the trading day began.

A source has provided us with this grainy, black and white video clip from a 2005 Federal Reserve meeting. We are told this has been the standard opening for all meetings over the last seventy years.

Ok. Maybe not, but regular readers get the point: Plan accordingly knowing who and why bubbles and inflation exist, and what such policy does to an economy long term. If you don’t have the answers, find someone who does.

We’ve been monitoring the campaign of Ron Paul simply because he is the only candidate running for U.S. president that is willing to push a conversation about the Federal Reserve and its role in enabling the housing bubble and the current credit crisis. This is a creative piece done in the popular (among the youth, at least) Lego format, and it gets right to the point about the real and only role played by the Fed since its inception in 1913.

It is our suspicion that the real Mr. Fed isn’t so pleased as his Lego counterpart is at the end of the short video.

Dr. Marc Faber was on BloombergTV again today.   He’s always worth a listen.  He’s been pretty accurate in his calls for a credit crisis over the last few years.

We couldn’t agree more with his observation that the U.S. economic policy makers have misdirected the economy towards consumption instead of capital formation and savings.  As such, they’ve enabled terrible dislocations that are exposed as unsustainable / liable to collapse absent constant easy money.   Of course, the latter has its consequences as well, considering what’s been going on with real price increases (never mind the virtually useless CPI figures…).

Amid all the corporate and Wall Street desperation to jump-start consumers through the holiday season, here’s a piece I’ve always found to be refreshing through all the noise.

Merry Christmas and Happy Holidays to all!

With the Christmas fast Approaching, we thought a few clips of Pavarotti’s holiday performances might be a nice addition for those inclined. Above is Gesu Bambino circa 1975. We’ll add a few more next weekend and into the holiday as a year-end tip of the hat to one of the greatest ever.