Welcome to The Golden Sense! October is here and the weather is changing. Not only is the weather changing but so is the world. The wild news you hear on TV and big stock market moves are all part of an ever changing world. It's tough to keep up with. Most stories just seems like random events.
However, it is important to identify big global changes that are occurring.
Question: Why does it matter? I mean..who cares...isn't that just an exercise in academics?
Answer: Not really. It does matter because when you have a global perspective you can act and benefit from it for yourself. You know the saying: 'Make the trend be your friend.'
It's equivalent to asking a sailor why he cares which way the wind is blowing. Or why a farmer cares what the temperature will be.
It matters because even in today's economic depression, trouble, and change there is a flip side to the coin. Fortunes can be made. People will find happiness. It boils down to a choice. Which side of the coin do you want to fall on? It is up to you.
The world is full of trends and changes. Some of these trends and changes occur on a small level. Some occur on a global scale. It is nearly impossible to identify all the trends and changes that are occurring around the world. However, I see THREE trends that will have a profound effect on young Americans.
First-
We are living through a time of globalization. Globalization is the process by which markets integrate worldwide. Over the past 60 years, it has accelerated steadily as new technologies and management expertise have reduced transportation, transaction costs, tariff expenses along with other man made barriers in regards to international trade.
It can also be referred to as "the great leveling era." This is where the standard of living in Asia, Latin America and
It's logical and it makes sense. The people who do more work for less money will compete with the people who produce less at much higher costs. Today, there is an increasing amount of manufacturing and production that is occurring outside of the United States and Europe. Today, the emerging markets account for almost half of global GDP. The consequences are obvious. Wealth is now flooding to the countries that are doing the producing while United States and Europe are at a standstill. In the West, the stress will be on the unions, the cost of living, the job opportunities, and our purchasing power.
The decline in the United States and Europe is compounded by their truly horrific debt. It’s not rocket science. Arithmetic is the same for a government as for the guy driving a Mercedes on a Volkswagen budget: Spending more than you make, let alone more than you will likely ever make, leads to ruin (Russell). The only difference is that it takes governments longer to get there. The crushing burdens of debt and low production is causing the standards in the west to decline.
If you are living in the West it is important to understand these changes and identify the opportunities that arise with this change. Not all is lost. There are opportunities. There is always a flip side to the coin. You must identify the right industry to get involved with. You must identify investments that have potential growth and secure your own monetary purchasing power.
It is impossible to know just how long this trend will last. What is possible is to identify the trend and position yourself or your company to benefit from this.
Second-
Fiat money is heading toward its intrinsic value. Fiat money is a currency system that has value only because of a government regulation or law. Today many currencies are based on a fiat system. Fiat money is political money. The defect with fiat money is the singular fact that central banks can create as much of it as they want at no cost in work, in sweat or creativity. The truth is that central banks are creating more and more money everyday around the world. The more you create of one item...the less it is worth.
Why should I work and be paid in a piece of paper that the government insists is money. I want to be paid with something that possesses value outside the government's pronouncement. That is the defect fiat money will always have.
It is said that given time, fiat money will move towards its intrinsic value, which, of course, is zero. This is the dreaded secret that the Fed does not want you to be aware of. To sum it up, fiat currency is a man-made product, and it is as safe as politicians are honest. Since politicians are not honest, I don't trust fiat money.
"A choice must be made between the natural stability of gold and the honesty and intelligence of the members of government -- with all due respect for these gentlemen, I advise you, as long as the system lasts, vote for gold." George Bernard Shaw.
Third-
A student loan bubble is being formed. The amount in student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York. Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation.
The chart below show how far the cost of tuition has risen compared to other expenses.
Why is this happening? It boils down to incentives. The banks and Government sponsored entities issuing the loans know there is no risk in giving out the loan. Why is there no risk? There is no risk because these loans are backed by U.S. Government (aka Tax payer). Entities such as Sallie Mae or the Federal Family Education Loan Program (FFELP) are huge culprits in regard to these poor lending standards.
The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future. It creates a generation of wage slavery. Young people working for years servicing debt.
There is now an increasing number of people attending colleges. A bachelors degree is actually losing its value because so many people are getting one. If a young American gets a bachelors degree, they are now just eligible to get a low starting position maybe earning a wage that can barely keep up with their growing debt. This is a huge reason why education is forming a bubble. The income one earns after they receive a bachelors degree is not keeping up with the rising cost of education.
Schools are serving lower-income students and offering courses online. The University of Phoenix, the nation's largest online school, got 88% of its revenue from federal programs last year, most of it from student loans.
The loans are issued from Government agencies or banks, then packaged up and turned into into ABS (asset backed securities) and sold off by investment banks. These asset backed securities are sold throughout the world to hedge funds, banks, governments and private individuals. Many are rated AAA. These securities are going to have a high risk of default in the future due to continued high unemployment in U.S. To me it sounds very similar to how subprime mortgages were handled just a few years ago.
I warrant caution. Try to position yourself not to fall into the trap.
At times like this, it becomes difficult to keep things in perspective. But when emotions are running high, that’s exactly the time when you have to step back and remember to focus on the big picture and the major trends. There’s a lot of scary stuff coming out and the media is feeding on this. This is why we need to focus on the big picture.
The big picture allows you to see past the short term and benefit from the changing tide.
As the television and radio icon Dick Clark once said: "I don't set trends. I just find out what they are and exploit them."
Over and Out
T. Norman
Halloween is just about here and the local university is the hot spot to go if you're under the age of 21. The spot is UCSB and the neighborhood of Isla Vista is where the huge party takes place. UCSB has historically been one of the top 10 party schools in the nation. On Halloween weekend Isla Vista fills up with students dressed scantily and guzzling booze. What can I say? It's the place to be if you're 19 years old.
I am in the market for a new car. I am selling my old 1998 BMW. It's on the market for $3500. I have looked at numerous cars and have decided that another BMW is the way to go. BMW's have great engines, excellent handling, and fantastic looks. That's why they call it the Ultimate Driving Machine.
So Gadhafi is dead. I have to say... the images surrounding his death are absolutely brutal. A disturbing scene. Gadhafi was the brutal dictator of Libya for 42 years. I knew there was only one way Gadhafi was going down... and that is in a gruesome fashion. Everything came full circle. He ruled with brutality and ultimately it came straight back at him.
Below are a couple jokes for our European friends:
-A Greek, an Irishman and a Portuguese go into a bar and order a drink. Who picks up the bill?
A German.
-A Greek, an Irishman and a Portuguese go into a bar and order a drink. Who picks up the bill?
A German.
And from the website of the German newspaper Deutsche Welle: There's a joke doing the rounds in Bratislava —
'For 400 euros you can adopt a Greek. He'll stay at your place, sleep late, drink coffee, have lunch and then take a nap, so you can go to work.'
'For 400 euros you can adopt a Greek. He'll stay at your place, sleep late, drink coffee, have lunch and then take a nap, so you can go to work.'
References:
Russell, R (2011) The Dow Theory Letters. La Jolla ,CA
