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- The GREED Carry Trade...America's Banana Republic... AND GOLD
The GREED Carry Trade...America's Banana Republic... AND GOLD
Howard Lindzon
November 24, 2009
The stories of Greed I read monthly in Vanity Fair are difficult to digest. This month’s was particularly sickening .
Our culture seems to be turning out record amounts of ‘sociopaths’.
My good friend Gregor Macdonald sent me a link yesterday to Wikipedia’s entry on Banana Republic’s . Gregor is not an alarmist, he is a thinker with a great sense of humor and an ability to invest based on conditions that exist, not ones that SHOULD happen. Here is the paragraph he linked me too:
Features of a Banana Republic
A collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts socialized.
Devalued paper currency in the international community.
Kleptocracy — those in positions of influence use their time in office to maximize their own gains, always ensuring that any shortfall is made up by those unfortunates whose daily life involves earning money rather than making it.
There must be no principle of accountability within the government so that the political corruption by which the Banana Republic operates is left unchecked. The members of the national legislature will be (a) largely for sale and (b) consulted only for ceremonial and rubber-stamp purposes some time after all the truly important decisions have already been made elsewhere.
“a money class fleeces the banking system while the very trunk of the national tree is permitted to rot and crash” — Christopher Hitchens [9]
Money was too easy to get for too long and there are obviously too many hedge funds with too much money. This greed carry trade is continuing as part of OUR Banana Republic.
The government financial policy has turned up the US Dollar carry trade that ‘The Fly’ outlines below.
Many of you worry about the carry trade, when, in fact, you should be embracing it, as if it was a winning lottery ticket— because it is!!! The dollar can weaken to Bernanke’s delight, providing the good folks from Wal-Mart Stores, Inc. (WMT: 53.20 -0.08%) keep the pantries of the proletariat stacked with cheap goods. After all, we have our trading partners by the short hairs. All they need to do is shut up, manufacture “stuff” and finance our debt—indeud! Due to artificially low rates, coupled with an exceedingly weak currency, money shifters are borrowing dollars, in order to buy “things” (stocks, junk bonds, art, collectibles) and “stuff” (oil, wheat, sugar, corn, copper, gold) with it. Unlike the infamous “yen carry trade,” the dollar is supremely liquid and makes for a better weapon to combat any suggestion or hint of deflation. We are spend thrifts and we will not have it any other way.
I tweeted last night, that while I have been long gold ( $GLD $DGP ) for over 5 years, I have been selling. Gold has historically done very poor after parabolic runs. Timing the end is difficult though. In hindsight, I should have pushed BUY, everytime I pushed SELL.
Based on the policies of our government and the economic conditions of our country, this run has been different.
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