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  Jim Kingsland

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  It’s Friday, and this happens to be a particularly special Friday as this 17th of February marks the eighth birthday of my youngest child, Nathan. Nathan means gift from God – all children are, but the circumstances surrounding Nathan’s birth were miraculous and so we chose that name. Later today we will converge on Chuckie Cheese’s (known for outbreaks of fista cuffs between parents), but I shall remain on my best behavior. It should be a fun time!

  With the newly induced “economic recovery”, thanks to worldwide Quantative Easing, stocks in their now technically overbought state are poised to open a bit higher once again. I haven’t talked much this year about stocks except to say the stock market would benefit from a continuing QE regimen. This is what the Fed in its century of history does best: it creates bubbles; it knows how to inflate assets. With on going QE tab totaling in the trillions and more due to come toward the end of the month from Europe, it’s no surprise that we get to be part of those kooky days when it seems everything (perhaps minus the dollar) goes up, up, up.

  But let’s deploy the use of a bit of perspective. In a blog post yesterday, friend hh reminded me about the downgrade that’s coming from Moody’s of over 100 of the world’s top tier banks.

  He writes: ‘So why am I writing about trouble, and why do I call it “plain vanilla?”
  Because the most important news today in the financial world didn’t get noticed.
  I’m talking about the Moody’s Investors Service notice that they were putting more than a hundred top-tier banks around the world on credit watch with negative implications. While the reason is probably due to the unknowable exposure to CDS, especially CDS written on European sovereign debt, the result is to threaten the base credit rating of virtually every large bank in the world.”

  Read the full post here: http://mindonmoney.wordpress.com/2012/02/16/plain-vanilla-trouble/#more-2507

  No matter what the supposedly good consequences are now of QE and rising stock and bond values, there is still a deep layer of major problems (to say the least since notional value is in the QUADrillion range) in the financial system that have yet to be reconciled: Credit Default Swaps, which are new en masse phenomenon to our present century. The ailing Roman financial system, once upon a time, took over 600 years to fall apart. Rome would have been gone in mere years as opposed to centuries if CDS existed then. It is way too early to call the weak U.S. economy cured as trap doors to black holes still lurk.

  We also want to see better EXPORT numbers… 10% of the economy and still looking droopy…

  

  Greater bank lending would also help.,,,

  

   
  There’s actually a whole host of charts available to show red flags among some of the positives.
  What can I say. I am paid to tell the truth, not to participate in the economic hype that is advantageous in an election year. You can bet yoiur bottom dollar, that you will be seeing more QE from the Fed, should the recent data turn south as we get closer to November. No, there won’t be the need for a Lehman like crisis, although you never know when one of those will pop up. It will be crisis enough for the present Administration even if the jobless numbers begin to rebound and our so called recovery starts to collapse like a cheap folding lawn chair. I regret to inform you that I think many can still be easily fooled and aren’t of the mind to protest further QE if the powers feel it’s warranted for the sake of saving us from just one term of you know who. If I were a betting man, we could wager and ask the average Joe the difference between QE and GE. Many wouldn’t know.

  And imagine, all of the economic gunning to get someone another 4 years in office, at the cost of making the future economic debts of kids like Nathan all the more larger over the course of their lifetimes. Nathan doesn’t understand yet when I tell him your generation will look down upon my generation because of the debt we’re leaving for you. There’s no rush. Childhood if for having good times, though my older son Ben, at 11, is starting to make sense of it all and has this idea in mind of being a pro golfer (he is very good) somewhere overseas.

  Oh, and I am not the only one who has reservations about the present state of things. Jim Rogers is worth a listen on CNBC: http://video.cnbc.com/gallery/?video=3000073700
  During a time of “printing” his longs are real assets. Jim is not in the U.S. market.

  #China central bank in gold-buying push – FT.com – Commodities on.ft.com/zmbijy

  Have a great weekend!

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