Of the 1%, by the 1%, for the 1%

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

 

This is the introduction to a 2-page essay in the May edition of Vanity Fair magazine.

It's written by one Mr. Joseph E. Stiglitz...and is an absolute must read from one end to the other:

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

Peso del Pacífico

Deus Forex Machina at macrobusiness has written some good stuff in the past on what 'drives' the AUD.

Its getting dizzy up there. With Mr Bernanke still having over a 2 months and a half of QE2 to go I won't be shorting it with my money.

I might with Mrs Livermore's Wednesday morning bingo winnings but not my money.

Other than Bernanke's raison d'être to destroy the $USD whilst cackling to himself like some mad bugger in the top floor of a misty Balkan castle, I think it still has some upside.

If I did find the Bingo money what would I be looking for? A pullback to around parity short term.

Because whilst the rising wedge is a setup for a big fall it is unlikely whilst Big Ben allows QE2 to run its course to the end of June

Lets look at the daily chart (graphs expand on clicking)....

1. So the rising wedge looks set but QE2 has a few months to go.
2. Portugal went tits up but no one cared.
3. Oil is going up like a raped ape as the Libya fiasco appears to be a West End musical choreographed by me after a bottle of Laphroaig and its 'ho hum' in NY.
4. The rain drops around the Japanese islands (and NE China, Taiwan and Koreas) glow in the dark and folks are more concerned with whether Charlie Sheen snorts a line and then swigs or vice versa. 
5. The Australian house bubble is unwinding and it appears resource juggernaut Western Australia is in technical recession and yet the AUD adds 3c (WTF!!).

Markets can remain irrational a lot longer than you and I can remain solvent

Anyway the correct way to trade a rising wedge is on the breakout confirmation. 

Top pickers are generally primates chasing a cheap feed whilst grooming  and bottom pickers tend, at best, to be Rugby League players with smelly fingers.

But counting down to June - QE2 ending, Spain to default (?), Civil war in Greece (?) and $150 Oil (?) lets look back at see what the big one will bring. Technically, when we broke out of the rising channel on the monthly we entered the twilight zone but the RSI 7 shows we can squeeze another 2 months outta this weirdness and the finance columnists at Fairfax and Newscorp can buy a few more jars of KY.

The next few months will be interesting as the world turns to shit and the only thing holding equity, commodity and risk currency markets in the stratosphere is Bernanke's bubble blowing.

The can they kicked down the road in 2008 is now in sight and we are closing fast.

Will there be a QE3? I reckon so. As soon as Bernanke takes the punchbowl away everyone at the party will turn nasty.


He'll try and bring out a new batch (QE3) but when they are 'glassing' each other will it be too late?

One thing though. There are number of bloggers and commentors calling for the RBA to short the dollar to save exporters.

Australian Dollar has a half brother who is actually a cousin, also, like him, sired by Uncle Risk Awnn.

AUD and Crude, Daily.

Weekly

Let it go interventionists, let it go.

You separate those boyos and you'll add 10% to grocery bills as diesel spikes and Bazza Beerslab will be paying $1.80 a Litre at the pump in a heartbeat WITHOUT the Middle East going up in flames.

Be careful what you wish for.

Rents Rise as House Prices Fall.

Bollocks.

Rents in Ireland have fallen 27% over 4 years as underlying house prices have fallen 40 - 70% (depending on region).

http://www.propertywire.com/news/europe/irish-rental-property-market-201008204424.html

Lets put that into context for those with the mathematical acumen that saw them being head cutlery polisher at David Jones Fountaingate prior to their stellar career as a Real Estate Agent selling off-the-plan at Noosa Heads.

Seamus O'Flaherty's investment property in Waterford was valued at  €1,000,000 and whilst he was waiting for it to double every 5 years (like all normal markets *snigger* ) he was renting it out for €3500pm. In 2011 he has it valued at €600,000 and his rent he is charging to get a tenant has fallent to €2550pm.

Now a good Aussie real estate spruiker will argue that Seamus' yield has improved from 4.2% to 5.1%. It does look more attractive if you ignore the fact that Seamus has lost €400,000 in equity and lost €11,400 in income.

They say you can take a pile of dog shit and in the right hands mould it into a cup cake shape and top it with cream, and a cherry and you can't tell the difference.

I don't give advice, I just comment. But I will give advice in this case. Sniff your cupcake before you take a bite.

PS If you've exhausted your Stephen King collection and want to sample some Celtic horror (hot tip: read it on an empty stomach, especially if you are a leveraged property investor):

Irish Housing Report Q4 2010

Smithy and the Birds

Like the iPhone game where "Angy Birds" are lobbed on contented pigs but in reverse.

Smithy has lobbed one back at the Birds (The Red Lame Duck and The Goose with the insecure limb loosely draped on the fiscal tiller).

In an amazing speech published in The Oz...

Mr Smith said Labor was part of the world's "weak government club" that had emerged in the past two years, led by European and US administrations.

"This government is with the weak government club pretty strongly," he said. "We have a world of weak government. In times of minority governments, the tendency is not to see through the next political cycle. That leads to very short-term and very populist policy. That is never in the long-term interests of a country."

Wow, talk about biting the hand that feeds the Kleptocracy. Is Smithy leaving?

I mean the Goose just bought another $4B in Residential Mortgage Backed Securities. Bringing the total taxpayer holdings of Mortgage Junk to $20B according to The Wall St Journal .

Its friendly gestures like this that keeps the taxpayer on the hook for the dodgy lending practices as exercised by Smithy and his kleptocratic cabal underpinning (attempted inflating?) a housing bubble, which, according to some such as The Economist is grossly over valued.

Is a divorce imminent? Where is the love?

Faber on CNBC

Dropping a bucket of faecal matter on Bernanke's printing policies and the Fed's grasp of reality.

You can literally see the penny drop in the reaction of the panel as a wave of realisation washes over them.

http://video.cnbc.com/gallery/?video=3000015563

I disagree with his views of Gold not being a bit short term bubbly at the moment and in my opinion is worthy of a pull back but in the long term it is real money and will probably maintain a longer term upward trajectory but his comments on underlying inflation in the here and now are spot on.

Chart courtesy of: http://www.shadowstats.com/alternate_data/inflation-charts