i've been waiting for this for weeks

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you know, take in some light, escapist fare, get my mind off things.

would you buy a used krugerrand from this man?

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so today i'm scrolling through my news aggregators when i come across the following:

wait--the great keynesian oracle of the left has, after a decade of dismissive condescension whenever the subject is raised, finally deigned to address the 800-pound bull in the room?  "oh, this is gonna be good," i think to myself as i click.

what follows are select quotes from dr. krugman's little treatise, interspersed with my comments.

he opens with the following parenthetical:

(Yes, it’s 4:30 AM where I am. I found myself wide awake, thinking about gold prices. You got a problem with that?)

i have not the slightest problem believing this--the barbarous relic's galling and unfathomable rise against all keynesian reason has no doubt caused the good professor any number of sleepless nights.

In assessing economic prospects since the financial crisis of 2008, there have been two kinds of people: inflationistas and deflationistas.

actually, there's a third kind of people he apparently can't fit into his model:  those (like me) who believe that as the crisis progresses, essentials like food, water, fuel and farmland will experience breathtaking inflation, while non-essentials (i.e., ipads and pretty much every other first-world frill one can think of) won't be worth the pound of rice one would rather have.  but i digress.

I am, of course, a big deflationista

well, no shit, paul--that's the only way you can claim with a straight face that all that stimulus couldn't possibly cause inflation (in fact, all of the chaos and death that took place over the course of the recent "arab spring" as a partial result of your and your cronies' misguidedly inflationary policies--maybe that's what should be keeping you up at night).

But what about gold? As some readers and correspondents love to point out, you would have made a lot of money if you’d bought gold early in this mess. So doesn’t that vindicate the inflationistas, to some extent?

a good question, i say.

My usual response has been that I have no idea what drives the price of gold

again, i totally believe him.

and then he goes on to take a gratuitous swipe at "glenn beck followers" before taking his readers down a twisting path to his sudden blinding insight:  gold is rising because of...wait for it...deflation!

how did he come to this unprecedented conclusion?  by a line of reasoning which is so torturous and convoluted--replete with diagrams and arcane references ("hotelling"--really, paul?)--that i won't even attempt to condense it here.  seriously, you gotta go take a look for yourself.

anyway, after contorting himself into a rhetorical and logical pretzel in order to make the square peg of reality fit into the round hole of his worldview, he comes to the following conclusion as regards his shiny new model:

And this says that the price of gold should jump in the short run.

really, paul--ya think?

he then goes on to gloat about how "intuitive" his new revelation is (so intuitive it took him ten years to dream it up), and humbly closes with the following:

But suppose this [my theory] is the right story, or at least a good part of the story, of gold prices. If so, just about everything you read about what gold prices mean is wrong.

that's right, doug casey--and jim willie, aubie baltin, peter schiff, doug mcalvany, roger weigand and all the other other clear-eyed analysts i follow who started tracking the rise of gold right after the dotcom bust back at about the same time the good dr. krugman was saying shit like

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

all of you rubes may have been right, but it was totally for the wrong reasons, you got that?

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so now that dr. krugman has devised a face-saving way for him and his fellow academicians to climb aboard the gold bandwagon, will their mainstream followers be far behind?  is this the push gold needs to enter phase two of its long bull market?  stay tuned...

a post-labor day post

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i used to be such a conscientious blogger--you know, posting semi-regularly, responding to comments, following up on dangling threads, that sorta thing--but all that has pretty much gone by the wayside lately.

all i can offer by way of explanation is that i've become a deer caught in the headlights of world events--events i've long known would come to pass, and from which i've profited handsomely, but which have nonetheless stunned me with their unfolding speed to the point that i can do little but watch in dismay as the world as i've known it disintegrates before my eyes.

one of the things each of my chosen prophets predicted (and the thing which prompted this post) was that the global elites who caused this mess would, when the shit finally hit the fan, set the victims of their crimes against one another, thus effectively deflecting blame from themselves.

and this they've done, brilliantly:  first, by making their crimes so complicated that barely a handful of their educationally dumbed-down victims could begin to grasp the enormity of what had been perpetrated upon them; and second, by enlisting their bought-and-paid-for media shills and politicians to fan the flames of (lower) class warfare.

so the tea party's declared war on labor, and labor has just declared war right back, when their collective rage might be more constructively utilized by, say, banding together, rampaging through the streets and hanging investment bankers from every lamppost in lower manhattan.

not that i would ever advocate such a course of action, you understand.

they say it's the first thing to go

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me:  wow, so you're really an art detective?

him (enunciating carefully):  no, i'm in architecture--we design buildings.

funny, never heard from him again

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[from the archives]

a corollary to the pomona theorem:  it can be wise to refrain from exercising one's scintillating wit until after one has closed the deal.

the parable of the dented fender

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remember back at the end of this post where i proclaimed my love for my new car?

yeah, well, we always hurt the ones we love (or maybe that's just me).

when i went in for the estimate, i pushed the guy to try and keep it at or below $1,000, that magic number being my deductible--that way, i figured, i could just pay for it outta pocket and avoid filing a claim with my insurance company.  when he balked, i told him i'd be perfectly happy with a used fender, and the bumper didn't look too bad--it just needed a little touching up.

for a minute, it looked as if it might be possible--until he opened the hood, that is.  as he poked around, finding more and more wrong, my heart sank--as the total inched inexorably toward the $1,500 mark, i realized i'd have to file a claim after all.

with that realization, my attitude did a complete one-eighty.  screw the used fender and the touched-up bumper--if the insurance company was picking up the tab, we were gonna fix this fucker better than new, goddammit.  as he continued to poke around, finding more and more wrong and the total inched inexorably past the $2,000 mark [because by now he knew the insurance company was involved], my satisfaction grew--suddenly, i was all, like, "hey, look at this" and "don't forget about this" and "i know it's on the other side of the car, but can you fix this, too?".

in other words, i displayed the kinda behavior humans can reliably be counted on to lapse into when, as the redoubtable mrs. thatcher so memorably put it, it's "other people's money".

what's the point of this little parable, you ask?

simple:  next time you wonder why (a) healthcare and college in this country are so expensive; (b) government spending and future entitlements are orders of magnitude higher than revenues; (c) the welfare classes are rioting in europe; and/or (d) [insert leftist- or corporatist-induced economic distortion of your choice here],

come back, read this post and multiply the above numbers by a few trillion.

look out, here comes tomorrow

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[i know this blog hasn't been much fun lately.  i promise some entertaining shit soon.]

so the market's crashing and everybody's all, like, surprised and shit.  or should i say, everybody but my eleven readers, upon each of whose memory is engraved in letters of fire that immortal post i wrote back in april in which i laid out exactly why what's now happening would happen right about now, right?

no?

(sigh)  i really wonder why i bother sometimes.

well, lemme start this post with why what's now happening is not happening:  it's not happening because, as our "let 'em eat cake" president maintains, the recovery he so splendidly engineered has suddenly hit a patch of bad luck

You had an Arab Spring in the Middle East that promises more democracy and more human rights for people, but it also drove up gas prices -- tough for the economy, a lot of uncertainty.  And then you have the situation in Europe, where they’re dealing with all sorts of debt challenges, and that washes up on our shores.  And you had a tsunami in Japan, and that broke supply chains and created difficulties for the economy all across the globe.

the irony of blaming the "arab spring" uprisings which were caused in no small part by the inflationary policies of his phony recovery aside, what the president failed to mention in that nice little speech was the fact that, despite each of the incidents he cited, the american stock market had, by the end of june, regained the ground it had lost over the spring and was approaching its two-year highs.

in fact, the stock market has continued the climb it started back in march 2009 (i.e., the beginning of the "obama recovery") through all sorts of bad news that in any sane universe shoulda sent it tumbling to 4,000 long ago.

was this because the american "recovery" was sufficiently strong to weather such storms, as the president, his lackeys and so many in the media maintain?  fuck no--it was because, for most of the last two years and four months, at the first sign of faltering,  the plunge protection team (aka the fed) was there to pump whatever liquidity was required into the market to keep it buoyant [seriously, i only wish i had a nickel for every late-session turnaround "rally" the market has staged over the last couple years].

but then the quantitative-easing party ended: as of june 30, there were no more liquidity injections courtesy of helicopter ben.  the market see-sawed around through most of july like one of those staggering cowboys that had taken a bullet in a bad western, and then it was finally time to drop.

and drop it has, just like back on april 8 i told you it would:

if, as promised, [bernanke] ends QE in order to curb the inflation, our vaunted "economic recovery" that's been running on nothing but this fed-provided life support will promptly collapse, taking with it not only precious metals (temporarily, anyway), but the stock market, job creation, what's left of the housing market and whatever shreds of hope barack obama might still have of re-election.

i.e., what's happening now is a long-delayed continuation of what started back in 2007:  the inevitable death spiral of the american economy.

ah, but i was wrong about one thing, wasn't i?  see, usually when the market corrects in any serious way, it takes metals with it, if for no other reason than because investors are often forced to liquidate their winners to cover their losers.  but boy, not this time--people are starting to catch on.

so where do we go from here?  by the time you read this, tomorrow will have come, and i don't expect it to be pretty.

on august 26, ben bernanke will give a speech from the fed's annual economic symposium at jackson hole, wyoming.  why is this important, you ask?  because he used the occasion of last year's speech to announce QE II, which promised infusion of new liquidity gave the market another year of seemingly vibrant life.

if, as is widely anticipated, mr. bernanke uses the occasion of this year's speech to announce another round of, as governor perry of texas recently put it, "money printing" in an attempt to stem the current market bloodbath and thus kick the can down the road one more time, will it work again?  i honestly dunno--the world is waking up awful fast.

here is what i do know:  at the time of mr. bernanke's speech in august of 2010, you coulda bought an ounce of gold for a little over $1,200, and an ounce of silver for a little over $17.

august 2012?  extrapolate for yourselves, bitches.