Monday, July 30, 2012

Solar is now a screaming buy [SPWR]

I generally avoid discussing particular sectors or stocks on this blog but I just have to point out that solar is a screaming, flaming buy.  It is now exactly at the levels that Prechter predicted many if not all stocks would go: down to about 5% of their real worth.  One of my favorites for the coming big bounce is Sunpower (SPWR).  At its credit induced bubble peak the company shares were going for $165 each.  Now the market has run them into the ground as if they are nearly worthless at $3.77 each.  That is a whacking far worse than the Dow average decline of 89% during the great depression. 

If any stock has value, SPWR does.   While it doesn't currently pay a dividend, is forward PE is now a very fair 8.02.  Better still, its P/S is only 0.19 and P/B is only 0.36.  Prechter predicted that many stocks would see PEs of 5-6, P/S of 0.5 and P/B of 0.5 before the collapse is over.  Sunpower is below that right now. 
It posted a huge loss of $6.66 per share over the trailing 12 months but it has 302mn cash and 693mn debt.  Its basically trading at breakup value right now.  10.4 % of its shares are held short (pretty high - these people all have to cover some day and will likely do it all in a hot hurry to lock profits in quickly).

In addition, one of the world's largest petroleum companies, Total SA, purchased 60% of the company for around $24 per share back in 2011.  As part of the deal, Total will provide a $1 billion line of credit. Finally, Sunpower is right up there in the list of solar panel efficiency as shown above-left.

So why now?  The stock has been falling like a rock (along with other solars) for a long time.  Why buy now?  Several reasons:
  • At today's price of $3.77 it's like buying a long term, non-expiring call option.
  • At some point the shorts have to cover.
  • Volume has been falling off.  This is generally a good sign that a trend change is near.
  • Electricity prices are climbing.  I have a friend who explained to me how his electric bill has jumped both in terms of cost per KWH and in terms of new fees and charges.  The result: his typical $400 something electric bill is now an $800 something bill.  As a result he is now thinking about solar panels.
  • EU countries that bought heavily into solar (to fuel the original bubble) will soon default on the Euro debt and will revert to their historical currencies.  When this happens they will again be able to buy solar without the Germans and the French telling them not to spend money.  The market is forward looking.  At some point it will factor in a Euro crash.  This will send the blue chips into the tank and the smart money will be running to cash and then later on into commodities and into energy. 
    • Why?  Because deflation NEVER lasts forever and when the markets finally bottom there will be a massive inflation based on a much larger monetary base than has ever been in play in history.  It will cause solar companies to get a huge bounce as people flee from rapidly rising oil prices into something that at least they can control.  Solar power might still be expensive but at least you will know that your monthly bill is simply going to be the payment on the loan you used to buy the system with.  If anything, that debt will get easier to pay off once the Great Inflation hits us.  I'm not saying we are ready for inflation yet (deflation has not yet played out).  But someday it will come and solar panels have a working life of 25 years or more.  They will still be there producing power when the inflation arrives.
  • Total SA already bought 60% in the low $20s. If they announce they will purchase the rest of it the stock could double or triple overnight.  Even a simple extension of larger credit lines by Total to Sunpower will cause the stock to rocket.  Why? Because it will give Sunpower not only staying power in a depression but it will also give it acquisition power.  Solar industry consolidation is upon us and those with credit lines will pick up the pieces of those who go under for literally pennies on the dollar.  It will make the survivors very strong during the recovery. That has to be a concern for the short sellers.
If all of the above reasons didn't convince me that now is the time to start accumulating, all I had to do was look at the chart.  I see that SPWR is currently tracking out a 5th of a 5th of a 5th.   It has also completely retraced its mania chart.  This is getting to be, if not already there, a once in a lifetime buying opportunity.  A good strategy here is to dollar cost average in.  If it goes down a lot more then pick up the pace of buying.  All you need is about $5K worth of the stock at these price levels in order to have something that could return some real money in just a few year's worth of holding. 

Tuesday, July 24, 2012

Italy and Spain, of course. But France and Germany as well....

By now people all over the world are starting to get it.  Iceland was the tip of the iceberg.  Ireland was just window dressing.  Greece is a relative side show.  It has yet to default but smart people know that it's a foregone conclusion.  The big show is now on the stage as Spain (which Mish says is now in a "death spiral"), Italy and France start to slide into the abyss closely followed by Germany.

Yes, that's right, Germany.  The big export powerhouse of the EU.  Many people still haven't seen it because it is unfolding right here, right now.  Mish is now reporting dramatic reductions in exports over the last quarter for Germany.   Its getting to an economic blood bath and in fact it's starting to smell like late 2008 again wherein the global economy almost came to a full stop for several weeks.  Sales are just collapsing.

The fact that Germany is starting to slide down the tubes might be news for some people but not for Economati.  From my uniquely early view that the global economy is now one huge interconnected debt Ponzi gave me a vantage point where I could clearly see what was coming and why.  In fact, I posted several times (including this little gem) on the fact that France and Germany are as screwed as those they are wagging their fingers at.

Brace for impact, folks.  These things have a way of getting held back and held back until they erupt like Krakatoa.  As the economies go under, the banks associated with them will teeter and tumble.  There will be capital flight.  There will be bank runs.  Banks will go bankrupt en masse because banks that practice fractional reserve lending (which is all of them) are basically running a controlled bankruptcy at all times.  All that has to happen is for people to take their money out and the banks will be insolvent.  When that happens governments will bankrupt themselves bailing out their beloved banks without which there might be no market for government debt.

It's one big massive circular debt Ponzi.  At the end of the day the money of all countries will be severely devalued against gold and silver metal.  That is going to happen.  The longer governments fight it, the worse the backlash is going to be and the higher the metal is going to soar once the people panic in unison out of fiat currency into tangible goods. 

The end game for the US will be after all the foreign currencies get trashed that US dollars will be the last man standing.  When that happens, US exports will become very expensive to foreigners who will have to curtail the purchase of our stuff.  When that happens the US government will have little choice but to fire up the printing presses and debase the dollar even more.  This will drive a period of massive inflation.  First the other nations have to collapse though and the dollar will see renewed strength as the best looking horse in the glue factory.

People of Greece: if you have not already taken your money out of your banks and put it into gold then it's too late for you.

People of Spain: run, do not walk for the exits.  Your government is going to collapse.  There will be even more riots and massive inflation.  There is zero reason to leave any long term retirement wealth in an Spanish bank.  The fact that your wealth is Euro denominated means NOTHING.  Run into gold and silver as quickly as your feet will allow.

People of Italy: look at the rapidly rising interest rates of your government debt.  Your government cannot afford to roll over its debt at these high rates.  Your country is in the end game.  Get the heck out of your banks or get left holding an empty bag.  When the Euro disintegrates, gold and silver will still be useful in trade.  

People of France and Germany: I've already explained why you are only 1/2 step behind the PIIGS.  In short, your paper fortunes were built by selling exports to deadbeats who cannot and therefore will not repay you.  Your governments were in on the scam right there supporting your multinational corporations taking out massive loans in order to build production capacity to feed the credit-juiced exports market.  When the deadbeats default on you it will be a double whammy. 

You will lose the paper wealth you thought you had (think retirement funds, etc.) and you will be stuck with useless excess production capacity which requires regular loan repayments at a time when exports are not selling.  Your government will have to step in but many of your banks will collapse because they are leveraged up 40-80x (not percent, TIMES).  They are all Bear Stearns now just like the big US banks.  They will collapse.  It will end up debasing the value of any savings that you have stored in paper money or other fiat currency denominated assets.  The math of this will not be put off forever.  Get yourselves into money metals ASAP or go down in economic flames.

Tick Tick Tick...

PS, the dollar is not a good or safe long term resting place for your stored wealth.  It might look strong today but that is a Madoff-ism, an apparition.  You can get away with hiding your assets in dollar denominated investments for now but over the longer term the only safe haven will be monetary metals (gold and silver).

Tuesday, July 17, 2012

Bernanke is soooooo full of $hit!

When the credit Ponzi was still in the run up portion of the mania, Bernanke was busily concentrating power into the Federal Reserve and into his moneymen pals.  As a result, its mission and objectives became larger and larger and bankers became systemically important to the economy.  The most recent federal reserve mission statement reads:
  • conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
  • supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
  • maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
  • providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
It's pretty clear that the federal reserve has pretty much failed on every count but the hubris involved with trying to be responsible for the items highlighted in red is out of this world.  Why didn't they also take on "a chicken in every pot, a car in every garage and sex 5 nights a week" while they were at it?  And all of this is coming from an organization that doesn't actually DO anything productive.  All it does is sit on a throne and dictate how others should behave economically.  What an elitist scam!

In any case, the basic tenet behind Keynesian / Federal Reserve policy was/is that the government should be a sort of economic shock absorber.  If people didn't feel like spending, government would do it in their name.  If government didn't have the tax revenue to pay for it, it would just borrow the money to fund it.  Then (supposedly), after the danger is past, the government would tighten up the screws, collect more taxes and use the good times to pay down the debt so that the shock absorber would be ready and waiting to absorb the next shock.

The only problem with this obvious con game is that the shocks are coming faster than the shock absorber can recover from the last one.  Bush's tax cuts were supposed to be temporary cuts designed to boost a flagging economy.  But the economy has never recovered and so Bernanke is now warning that allowing them to expire will cause a recession.  But wait, oh omnipotent Ben, aren't you in charge of  "maximum employment, stable prices, and moderate long-term interest rates"???  Why is it is all of a sudden going to be the fault of Congress when we slip into recession/depression?

At the same time, the article goes on to say, "But the Fed chairman made clear his most urgent concern is what would happen to the economy if Congress can't resolve its budget impasse before the year ends.".  So clearly, Bernanke is trying to set the Congress up for a fall.  Damned if they do, damned if they don't.  If they do the honest thing and raise taxes then it's recession (depression more likely).  But if they don't balance the budget then expect massive inflation which is just as bad if not worse than a depression.  Bernanke, you shameless B@$T@RD!  Nobody can have it both ways and you know it!  You took all the credit when the Ponzi was being pumped but now that it's being dumped you want none of the blame.  You are a criminal!  You need to be put behind bars for high crimes and treason.  You have betrayed the American people and all peoples of the world with your elite con game.  You deserve no less than to share a small jail cell with Greenspan until the life leaves your old, tired body due to natural causes.

I can assure you, the blame game is a clear sign that the end game is playing out.  In fact, there is no avoiding a massive recession and more likely a massive depression.  Bernanke is just a ridiculous con man and I guarantee you his credibility will be $hit within 2 years.  People will spit when they hear his name.  You will know it is going to happen if the federal reserve is ever audited by an independent source which can be trusted by the people.  Many skeletons will be dragged up in the process which would never occur if the economy wasn't collapsing.

To be fair, it really won't matter much if the Bush tax cuts are extended or not.  The debt Ponzi that was architected by "maestro Greenspan" is rolling over and jobs will go with it.  When that happens the spending will collapse and corporations will go into hibernation mode hoping to survive long enough to make it through the hard times so that they can be one of the few left standing on the other side.  In other words, they will do the same thing that the big money has been doing as it ran into US government bonds that carry an effective negative return when inflation is factored in.  If you wonder why people park their money in such investments in times such as this, that is the reason: they want to have cash on the other side of the great crash so that they can buy distressed but valuable assets for pennies on the dollar.  Corporations that manage to survive the depression will be the new leaders.  Many of the current leaders are debt bombs which will not survive.

If Bernanke is allowed to remain in control, expect a deflationary crash.  Why?  Because fed-mandated massive inflation will certainly be blamed on him and on the federal reserve.  So unless there is a compelling reason for Bernanke to allow him and the federal reserve to become public targets, Bernanke will opt for austerity, not more money printing. But he also knows that will get very ugly - no different than Greece, Spain, etc.  There will be unemployment, demonstrations, riots and perhaps even worse.  And so Bernanke tries to slip out the back door with comments from the article such as ""Congress is in charge here, not the Federal Reserve".  All of a sudden, the fed "mandates" are looking a bit more like wishful thinking by a group of pompous elitist asses.

Bernanke is running scared now folks and the markets will sense it as certainly as I write this.  Prepare for rough waters ahead.  It is going to be unprecedented in US history IMVHO.

Sunday, July 15, 2012

This is how the Ponzi crumbles.

The US government has been running a decades long debt Ponzi.  It fueled rapid US growth and it kept the world at bay but the Ponzi is in the end game.  Not necessarily the last days, but if you look carefully you can see the beginning of the end on the horizon.  In short, people are getting tired of having their labor stored within a corrupt money supply which is hyper controlled by a corrupt government. 

People know that the salary they earn for the work they do is first partially confiscated by government mandates before the people have access to their own money.  Don't like it?  Too bad.  Didn't vote for it?  Too bad.  Don't want to comply with it?  Well, government would like you to believe there is no alternative but there certainly is.  The bottom line is that it is way too expensive to track each individual and what they do.   Government has been trying to use computers to help with this but they are losing control. 

Government still holds the winning hand as long as people use their money because it means government benefits from the daily activity of the economy.  Each transaction is another "ring the register" moment for the tax man.  Unfortunately for the government, too many people are just barely making it by these days and so they are getting very, very weary of supporting the system by the sweat of their brows.  Once the herd gets tired of its conditions, such conditions will not just accept that forever.  They know their labor is being stolen by government via inflation and via direct taxation.  They know that government pensions are far better than the normal day to day worker will ever see.

The only way out of the scam is to remove oneself from the grip of the government's fraudulent money system which is based on the con of fiat currency and fractional reserve banking. It's not easy to do because it's all most people have ever known.  But, once people begin to prosper by avoiding the laborious burden of big government, the herd will start to move with it and when it does then it's game over for the Lighthouse Crowd.  There have already been some attempts at creating new local money supplies (such as the Liberty Dollar) but government has made a federal case of them using stupid technicalities and then punishing those involved very harshly.  But the government can only attack something that has not reached critical mass of public acceptance.  For example, it seems that the Berkshares currency does not have the feds attacking them yet as they cannot come up with some technicality to attack with.

Berkshares may or may not make it over the long term but what is important is that many people, both domestic and foreign, are looking for dollar alternatives and trying to build new economies  around them.  Never forget that economies are really all about the exchange of labor and that money is only a proxy for that labor.  Maybe someday someone will come up with a currency called workshares.  That would really send the message that new wealth cannot be created simply by printing new paper markers, only by engaging in productive labor.

Saturday, July 14, 2012

Fractional Reserve Lending is Fraudulent

Ron Paul taught me that the federal reserve is a scam.  It was because of him that I even started researching economics because what he was saying sounded crazy yet it explained so many things. It was during this research which started in early 2007 that I started finding people like Bob Prechter, Peter Schiff, Mike “Mish” Shedlock, Marc Faber, Reggie Middleton, etc. who spoke plainly in common terms with the goal of educating as opposed to Greenspan, Bernanke, politicians and moneymen of all sorts whose actual goal is “the purposeful language of obfuscation” which Alan Greenspan called “fedspeak”.  Read the wiki on this term and if you aren’t a bit pissed off afterward, check your pulse to see if you are really alive.  What’s described is a clear strategy at conning the people by the elite.  Greenspan did not act alone.  He was part of a grand banking conspiracy.  It is no longer a theory folks.   It is more akin to a silent coup.  The bankers own our politicians and they are calling the shots.

I was able to suspend disbelief early and do the initial research because I was not indoctrinated into “the system” in college.  I instead spent those years in the USAF which was more of a school of hard knocks.  It had enough scammers and a$$holes for me to study yet they were unsophisticated enough in their ways that I was able to catch on.  It provided valuable lifelong experience for me.  Contrast that with the con men running the government.  They are well educated, sneaky and generally cover their tracks quite well.  They know every trick devised by man since ancient Egypt to deceive man.  They know how the human mind works and they use it against us.  They know how herding works and again, it is used as a weapon against the individual.  This is why so many people still just don’t (and won’t) get it.

I suspect that few people actually get it even after all that has happened since the crash of 2008.  If you are still unsure what to believe then try this on, a direct quote from Mish:

Fractional Reserve Lending Is Fraud

By lending out more money or gold than exists, asset prices reach unsustainably high levels before they crash. Sound familiar?

Greenspan compounded the problem in 1994 by allowing banks to "sweep" checking accounts (unknown to customers) into savings accounts (via accounting entry).

Savings accounts have no reserve requirements. Effectively, money that people think is in their checking accounts is not really there at all. In fact, it has been lent out multiple times over.

This fact exacerbated the run-on-the-bank problems we saw in 2008. As a side note, FDIC insurance is another form of fraud.

Do yourself a favor and think about these words very carefully, line by line.  Here’s what I hope you can internalize from it:
·         Fractional reserve lending is indeed fraud.  It is government sponsored, government supported fraud, period.  It is not done without reason; someone is getting rich in the deal but it’s not you.
·         Fraud is crime.  Criminals should be prosecuted.  Apologies and clawbacks are not enough.  Punishments should fit the crime.  Fractional reserve banking has caused mountains of suffering in the USA and even more so abroad.  No serial murderer ever caused so much aggregate suffering.  Few wars have even done so and we are not even in the 4th inning of this yet.
·         More money has been lent out than exists.  A LOT more.  So much more that it can never be repaid.  Add to that the Ponzi promises of social security, medicare and pensions (which are effectively loans by people to the controlling organization).  Add to that the fact that loans can, are, and will increasingly be dismissed as a result of bankruptcy.  The mathematical result is that a lot of people who think they have something coming to them are not going to receive it.  Plan on it.  Start now or don’t whine later because whining will not fix it.
·         Our banking system is based on fractional reserve lending which is a fraudulent practice.  Fraud is where someone steals your money quietly using guile, deceit, the art of the con, grifter’s tricks and of course sophistry.    In a fraud people don’t know what’s going on, they suspect nothing until it’s too late.  They only become aware when the fraud collapses and it collapses suddenly.  If a very well informed financial person like Mish tells you that you are caught up in someone else’s fraud game, you should listen.  Our banking system is a fraud game.   Don’t leave any more wealth in it than you need to because all fraud eventually is discovered and no con game ever ran indefinitely.  We are in the End Game now.
·         The US Dollar is the creation of our fraudulent federal reserve.  If you have all your assets in dollars you will eventually be defrauded of them.  Nobody can say when and I’m not predicting it will be tomorrow or even next year.  In fact, the dollar might even strengthen from here for a period of time as Euroland collapses, Japan collapses and China hits very hard times and has to print.  In fact, I’m on record many times as saying the dollar would strengthen vs. global currencies as the first stage of the collapse and indeed it has been strengthening as you can see from the UUP ETF chart.  But it is a conviction-less strengthening as can be seen by collapsing volume that has been accompanying the dollar’s rise.  People are only getting into the dollar out of fear, not out of real desire.  This is not the underpinning of a long term trend.   The collapse of the dollar is in the cards somewhere on the horizon.  Math will not be denied.
·         The FDIC will not save you.  The FDIC is another unfunded government promise.  The FDIC is another government fraud. 
·        Physical gold is outside of all this fraud.  It is real and true.  Paper claims on gold held by someone else are not the same as physical gold in your hand, not even close.  At some point everyone will give up on the fraudulent money system and everyone will pile into the only source of wealth that can be trusted: gold (and perhaps some silver if you want to have some additional volatility in your metals portfolio).  Gold price may come down even more as deflation of the fraudulent money supply sets in.  Just dollar cost average into it over time with no leverage and you will be a big winner in the end.  The end must arrive before all of the boomers retire because that will be the maximum load on the fraudulent system.  It is what will cause the collapse (if global bankruptcies don't do it before that).  In other words, this is not some open ended fear factor.  It must occur before the patsies get paid otherwise they weren't patsies.  But we know they won't get paid because they are in a fraudulent monetary system ergo the system must collapse in step with or before the mass retirement of the boomers.  There's still some time left to defend yourself but action is required.
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