Monday, April 18, 2011

World Bank: World One Shock Away From Crisis; US Debt Downgraded; Texas U Takes Delivery Of $1B In Gold, Sign Of Things To Come; Finnish Vote Makes Pain In Spain That Much Bigger; Japan Says 9 More Months Of Radiation

Nothing seems to surprise us anymore. Given the condition of the financial markets, it won't be a stretch of the imagination to say the end of traditional stock investing is over and done with for all eternity; ironically we think it  has been dead since this so-called recession was officially declared over in June 2009. With that being said, today's (not so) shocker from the radioactive geniuses at the World Bank that the whole world is "one shock away from a full-blown crisis" is not only laughable, it's insulting to anyone with any intelligence whatsoever. If you need a good laugh to get your day started or to see how far behind the times they are, read that article from the BBC.

Interestingly, the people who run the University of Texas Investment Management Co., seem to be in step with reality and understand the full enormity of the global situation, as they have decided to take delivery of $1 Billion in gold bars and physically store them in a vault in NY. It seems they have figured out, when the SHTF worldwide, holding paper certs of gold or silver (or whatever asset) is as pointless as wearing a paint mask and sunglasses around reactor 3 in Fukushima. Taking physical delivery of silver and/or gold, is probably one of the smartest decisions holders of Euros/Dollars/Yen/Yuan et al, can make right now especially given the possibility of a shortage at the COMEX. "But I've got this paper here which says I own $40k in gold bullion!" Tough cookies!

Of course, the sovereign debt explosion (or rather implosion) isn't helping any. As reported here last week, Finland held a key election which has determined the fate of the entire EU. It turns out, the election yesterday went as we expected and right now, all future bailouts to Greece, Ireland and Portugal are in doubt - meaning, no more free soup for them. Of course Spain, like Portugal, like Greece and like Ireland, doesn't need a bailout, so there's nothing to worry about. Right?

Surprise, surprise - a quick glance at the Greek 10yr bond yield shows a whopping 14.69% and the 2yr bond is a radioactive 20.01%(!) on top of Portugal's 9.29% 10yr bond. Of course the PIIGS will all restructure their debt this is bullish for the global economy. We give the P, the first I and the G in PIIGS about a month before the real fireworks begin. By then, silver will be ~$50 and Fukushima will producing gold plated uranium pellets.

Speaking of Fukushima, TEPCO announced last night that they plan to reduce healthy radiation leaks in three months, and in nine months, cool the reactors. Well, that's a load of bull off our minds; it's good to know that they will at least reduce the rising radiation leaks in three months time since the most recent readings have increased 6 fold in just a matter of days. As we like to say, you can't make this up. Reality is stranger than fiction.

In other news, US debt was predictably downgraded by the S&P. Nothing to see here - move along.

Remember, $3.52 per gallon gasoline is not harmful to the US economy, but $4.00 is. And that's why the Exxon CEO gets paid the big bucks, to make pure genius revelations like that. Of course, now that 7 states are officially averaging $4.00 for regular and the national average is only 17 cents away from that beastly level, it's bullish for the global economy. All that demand from the red hot economy is putting more and more people into big gas guzzling SUV's and that is pushing the price of oil and gas higher. It's not the endless money printing. Because Dr. Deficit says so.

Update 1: Something from the realm of surreal turned bananas and which deserves an official "laugh out loud" moment is this Poll of Economists provided to us by the good people at AP. Enjoy, but be sure to sit down first.


  1. It's a little bit funny how my experience of "taking delivery" involves having the bullion actually in my hands, but U Texas is fine with having it deposited in a vault in the midst of a den of thieves half a country away. I predict this ending badly...

  2. @Anon- I did also. I wouldn't be surprised if that gold gets turned around on margin somehow. And then one day when they go to check on it, it's vanished.

  3. I've got to agree with you. Nothing seems to surprise or "shock" us anymore. You bought all those headlines together like that and you would think that necks would be getting whiplash.

    The news of the University would have rocked things in the past, but it's almost been completely absorbed in financial circles I'm in. That is amazing to me and perhaps it's the reaction to all this news that is most shocking. And telling.