Tag: news

Submitted by Jim Quinn of The Burning Platform blog,

“One only needs to reflect on the dramatic decline in the value of the dollar that has taken place since the Fed was established in 1913. The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00. Another way to look at this is from the perspective of the purchasing power of the dollar itself. It has fallen to less than $0.05 of its 1913 value. We might say that the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentlessly inflationary policy.” – Ron Paul – End the Fed

 

The BLS reported the CPI yesterday morning. They tell me that inflation is well contained and has only risen by 1.2% in the past twelve months. Our beloved Federal Reserve chairman is worried inflation is too low. It is fascinating that the only people worried about inflation being too low are Ivy League educated economists and bankers whose wealth depends upon the middle class sinking further into poverty. As a person who lives in the real world, I can honestly say I like it when the things I need to buy cost less today than they did last year. When did inflation become a good thing for the average American? Our country was somehow able to grow from a fledgling new country to a world power in just over a century while experiencing mild deflation, except during times of war. The fallacy that inflation is beneficial to the common man has been peddled by bankers since 1971 when Nixon and his cronies closed the gold window and unleashed the inflationary boogeyman in the form of feckless politicians, captured Keynesian academics, and greedy soulless bankers.

It is no coincidence inflation accelerated the moment politicians, academics and bankers were unleashed to spend your money at will in order to obtain votes, Nobel prizes in economics, and ill-gotten obscene levels of wealth. David Stockman described Nixon’s dreadful sellout of the American people in his brilliant new book:

“Nixon’s estimable free market advisors who gathered at the Camp David weekend were to an astonishing degree clueless as to the consequences of their recommendation to close the gold window and float the dollar. In their wildest imaginations they did not foresee that this would unhinge the monetary and financial nervous system of capitalism. They had no premonition at all that it would pave the way for a forty-year storm of financialization and a debt-besotted symbiosis between central bankers possessed by delusions of grandeur and private gamblers intoxicated with visions of delirious wealth.”  –David Stockman – The Great Deformation: The Corruption of Capitalism in America

The USD has lost 83% of its purchasing power since 1971. The moment Nixon began playing politics with the USD and bullied the Federal Reserve Chairman into pumping up the money supply prior to the 1972 election, the inflation genie got out of the bottle and led to the miserable stagflation of the 1970′s. It took extreme measures by Paul Volcker to get it back under control in the early 1980′s. Since Volcker we’ve had nothing but academics and toadies who have chosen to change the definition of inflation in order to mislead the average American regarding how badly they are getting screwed. Every refinement, tweak, adjustment, or revision to the calculation of CPI has been designed to produce a lower figure. Why control inflation when you can just change the calculation to suit your purposes?

Over the proceeding decades, the BLS has sliced and diced the CPI in such a way that they can make it say whatever TPTB want it to say. They need to keep the mushrooms (you) in the dark regarding your standard of living deteriorating, while the beneficiaries of inflation (bankers, politicians) see their standard of living soaring. They have made hedonistic “adjustments”, quality “adjustments”, substitution “adjustments” and geometric weighting “adjustments”, all with the sole purpose to reduce the level reported to the American people on a monthly basis.

CPI was supposed to measure a common basket of goods and services that Americans needed to purchase in order to live their lives. If the price for this basket rose, you had inflation. If the price for this basket fell, you had deflation. The politicians, academics, bankers  and government bureaucrats decided if the price of steak went up by 10%, you would switch to chicken, therefore the price of steak did not go up by 10%. They decided if the price of a new car went up 5%, but you now had heated seats, the price didn’t really go up 5%. They now want to change to a chained CPI, which will further depress the reported figure. CPI no longer represents the increase in price of goods and services you need to live your day to day life.

Even the composition of the index doesn’t match the true cost picture for the average American. Somehow they bury the energy component within multiple categories and have the gall to argue that energy costs only comprise 9.6% of the average American expense budget. Tell that to the suburban two worker family that drives 30,000 miles per year and has to heat and cool a 2,000 square foot home. I doubt that too many families only spend 7% of their money on medical care. Housing accounts for 41% of the CPI calculation, but it is again a made up calculation called owner’s equivalent rent. Only an Ivy League economist could explain the calculation. The fact that home prices have risen by 12%, rents have risen by 4% and mortgage rates have risen from 3.25% to 4.5% in the last year somehow results in a 2.4% annual rate of inflation for housing.

 

If you have the feeling your standard of living has been falling  for the last few decades even though your owners tell you the economy is expanding, inflation is contained, unemployment is falling, the stock market is rising, and consumer spending is growing, then you might be smarter than a 5th grader. The financial elite ruling class are counting on the dreadful public education system, along with their mainstream corporate media propaganda arms, to keep the techno-distracted math challenged masses from understanding how the financialization of the country has resulted in their demise.

Being a skeptical sort, I decided to verify the accuracy of the CPI propaganda issued by the Bureau of Lies and Scams. The combination of the internet and memories from my youth provide a powerful and accurate assessment about the truthfulness of our government. I decided to create a chart of goods and services that average Americans have spent their hard earned wages on for decades. In a matter of minutes I was able to obtain prices from 1971 for various items common t
o most people. I was eight years old in 1971, being raised in a middle class one earner household on the salary of a truck driver. The chart below provides the proof the government CPI data is a bad joke and the American people are the butt of that joke.

Category	1971	2013	% Change
Average Price of New Car	$3,470	$31,252	800.6%
Average Price of New Home	$26,000	$245,800	845.4%
Gallon of Gasoline	$0.36	$3.50	872.2%
Natural Gas	$0.35	$4.00	1042.9%
Loaf of Bread	$0.20	$2.20	1000.0%
Sirloin Steak per pound	$1.19	$7.00	488.2%
Dozen Eggs	$0.25	$1.90	660.0%
Box of cereal 12 oz	$0.36	$3.50	872.2%
Pack of Cigarettes	$0.32	$6.00	1775.0%
College Tuition – Private	$1,832	$30,094	1542.7%
Monthly Rent	$150	$1,073	615.3%
Baseball ticket – Phila	$2	$23	1050.0%
Movie ticket	$1.50	$9.00	500.0%
Maximum Social Security Tax	$406	$8,950	2104.4%
Median Household Income	$9,028	$51,017	465.1%
Median wage per worker	$6,497	$27,519	323.6%
Average Hourly Earnings	$3.60	$20.31	464.2%
CPI	40.5	232.0	472.8%
Consumer Credit Outstanding (tril.)	$0.14	$3.07	2092.9%
Mortgage Debt Outstanding (tril.)	$0.51	$13.18	2484.3%

The BLS tells me the CPI has risen by 473% since 1971. The very same agency also tells me average hourly earnings have risen by 464% since 1971. This means the average worker is earning less than they did in 1971 in real terms. The median wage per worker has lagged CPI dramatically, as the averages have been skewed by those making outrageous compensation in the financial world. Median household income has barely kept pace with inflation even though households were forced to send both parents into the workforce, with the expected consequences of higher divorce rates and children left to fend for themselves or be raised by strangers.

By the government’s own measures, the average American’s standard of living has fallen since 1971. But, we also know the government has been manipulating the CPI figure lower since the mid-1980′s. After examining the true cost increases for housing, transportation, energy, food, education and entertainment, you would have to be brain dead or an Ivy League economist to believe inflation since 1971 has only been 473%. If home prices and car prices are 800% higher, while the energy needed to power and heat them are 900% to 1,000% higher, and the cost of food is 500% to 1,000% higher, how could the CPI only be 473% higher?

There are far more people going to college today than in 1971. With college tuition 1,500% higher, how can this not be reflected in the CPI? It certainly isn’t because the education is better. Statistics show the uneducated poor are more likely to smoke. Lucky for them, cigarette prices have risen at a rate of 4 times CPI due to the government taxing the crap out of them to fund their various taxpayer boondoggles. Inflation always hurts the poor and enriches the peddlers of debt.

My dad would take me to the brand new Veterans Stadium (built for $50 million in 1971) to see the Phillies in the early 1970′s. He paid $2.00 for a general admission seat and kids got in for 50 cents. We would buy a bag of soft pretzels outside the stadium and bring them into the park. We’d get a hot dog and soda for another $1. The entire outing to see a baseball game was about $5. Today, if I wanted to bring my family of five to a Phillies game at Citizen Bank Park (built for $458 million and paid for by the taxpayer) the lowest cost for the outing would be about $200. In 1971, you could spend a vacation week at the Jersey shore for $200. Now it gets you 3 hours of watching spoiled millionaires playing a child’s game while sitting with a bunch of foul mouthed drunks.

I also found it fascinating that the most regressive tax on earth, the Social Security tax, which hammers the poor and middle class while leaving the rich virtually unscathed has gone up by 2,100% since 1971. The rate in 1971 was 5.2% and the maximum salary level was $7,800. Today, the rate is 7.65% and the maximum level is $113,700. This increased cost for every middle class American is not factored into the inflation figures. Why would the government need to increase the maximum taxable wages by 1,500% when wages have gone up by less than 500%? The hard working truck driver bears the full impact, while Jamie Dimon not so much.

So now that I’ve proved beyond a shadow of a doubt the prices of everything we need to live have far outpaced our wages and the patently false drivel published by the BLS and parroted by the MSM, what are the implications? Well that is an easy one and is summed up by the last two entries in the chart. The average American has been lured into $16 trillion of debt over the last forty years in
a pathetic attempt to keep up with the Joneses. Consumer credit (credit cards, auto loans, student loans) has gone up by 2,100% and mortgage debt has gone up by 2,500%. The American people have been sold a false lifestyle dream built on easy credit by evil bankers and Madison Avenue PR maggots.

There are those who would blame the people who have chosen to live far beyond their means. They have a point. The American people certainly haven’t shown a penchant for delayed gratification, saving for the future, or consuming less than they produce. But it takes two to tango and the lead in this dance of debt has been and continues to be the Federal Reserve and their Wall Street bank owners. It’s always reasonable to ask – Who benefits? – when trying to figure out why something has happened over time. Did the American people benefit by increasing the debt owed to Wall Street banks from $650 billion in 1971 to $16.25 trillion today? I don’t think so, based upon the visible deterioration I am witnessing in my suburban paradise.

The financialization of America; where Wall Street con artists,shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped. But it is clear to me who the real culprits in our long downward spiral have been. Lord Acton stated the obvious, many years ago:

 “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”  ? John Emerich Edward Dalberg-Acton

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/85OYL9GjU6A/story01.htm Tyler Durden

As the US equity market embraces the suck of taper, the Chinese interest rate market seems a little upset. 1-Year swap-rates just spiked their most in 5 months (16bps) to an all-time high 5.065% (above the June Taper Tantrum levels). Following its enforcement actions on Bitcoin last night (and coincident DDoS attack on its website), the PBOC has decided not to inject liquidity into Chinese banks today

• *PBOC WON’T LIKELY CONDUCT REPO OPERATIONS TODAY: TRADER

Add to that the fact that the Indonesia Rupiah just dropped to its lowest in 5 years and we suspect more than little turmoiling this evening as the rest of the world figures out why taper is risk-on.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TNUZOo0-0lM/story01.htm Tyler Durden

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.

 

 

Think 24% is ok and Fed will just rescue stocks again?… things “esclated”…

to end -75%

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iUS2Qt7U3JU/story01.htm Tyler Durden

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.

 

 

Think 24% is ok and Fed will just rescue stocks again?… things “esclated”…

to end -75%

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iUS2Qt7U3JU/story01.htm Tyler Durden

Submitted by Nick Giambruno via Doug Casey's International Man,

I am very pleased to have had the chance to speak with Jim Rogers, a legendary investor and true international man.

Jim and I spoke about some of the most exciting investments and stock markets around the world that pretty much nobody else is talking about.

You won't want to miss this fascinating discussion, which you'll find below.

Nick Giambruno: Tell us what you think it means to be a successful contrarian and how that relates to investing in crisis markets throughout the world.

Jim Rogers: Well, there are two aspects of it. One is being a trader, being able to buy panic, and nearly always if you are a trader or an investor, if you buy panic, you are going to do okay.

Sometimes it is better for the traders, because when there is a panic—a war breaks out or something like that—everything collapses, and some people are very good at jumping in and buying. Then, when the rally comes, the next day or the next month, they sell out.

Now, the people who are investors can also do that, but it usually takes longer for there to be a permanent rally. In other words, if there's a war and stocks go from 100 to 30 and everybody jumps in, it may rally up to 50, and then the traders will get out, it may go back to 30 again. I'm trying to make the differentiation between investors and traders buying panic.

As an investor, nearly always if you buy panic and you know what you are doing, and then hold on for a number of years, you are going to make a lot of money.

You also have to be sure that your crisis or panic is not the end of the world, though. If war breaks out, you have got to make sure it's a temporary war.

I used to work with Roy Neuberger, who was one of the great traders of all time, and whenever stocks would panic down, he was usually one of the few buyers, because he knew he could get a rally—if not that day, at least maybe that week or that month. And he nearly always did. No matter how bad the news, especially if there's a huge drop, it's probably a good time to buy if you've got the staying power and your wits, because you will likely get a rally. In terms of panic buying or crisis situations, that's normally the way to play.

Now, it's not always easy, because you are having everybody you know, or everybody in the media shrieking what a fool you are to even try something like that. But if you have your wits about you and you know what you are doing, and you know enough about yourself, then chances are you will make a lot of money.

Nick Giambruno: What is the story behind your most successful investment in a crisis market or a blood-in-the-streets kind of situation?

Jim Rogers: Certainly commodities at the end of the '90s were everybody's favorite disaster, and yet for whatever reason, I had decided that it was not a disaster. In fact, it was a great opportunity and there were plenty of things to buy. In 1998, for instance, Merrill Lynch—which at the time was the largest broker, certainly in America and maybe the world—decided to close their commodity business, which they had had for a long time. I bought. That's when I started in the commodity business in a fairly big way. So that's the kind of example I am talking about. Everybody had more or less abandoned or were in the process of abandoning commodities, and yet, that's when I decided to go into commodities in a big way, because of what I considered fundamental reasons for doing it, but the fact that Merrill Lynch was getting out buttressed in my own mind anyway that I must be right, because, you know, everybody was out. Who was left to sell? There was nobody left to sell at that point.

Nick Giambruno: What about a particular country?

Jim Rogers: I first invested in China back in 1999 and then again in 2005. The market at those times was very, very bad. I invested again in November of 2008, when all markets around the world were collapsing, including in China.

So I have certainly made investments in countries with crisis markets, and I'm getting a little better at it than I used to be, because I have had more experience now. That's why I keep emphasizing that you have to know what you're doing. And by that I mean paying attention to and doing your homework on a stock or a commodity or a country. If you do that with a crisis market, then chances are you can move in and make some money.

Nick Giambruno: In your opinion, which countries today do you think offer the best crisis or blood-in-the-streets-type opportunities?

Jim Rogers: I think Russia is probably one of the most hated markets in the world. I don't think many people have a nice thing to say about Russia or Putin. I was pessimistic on Russia from 1966 to 2012—that's 46 years. But I've come to the conclusion that since it is so hated—and you should always look at markets that are hated—that there are probably good opportunities in Russia right now.

Nick Giambruno: Doug Casey and I were recently in the crisis-stricken country of Cyprus, which is also a pretty hated market, for obvious reasons. While we were there, we found some pretty remarkable bargains on the Cyprus Stock Exchange which we detailed in a new report called Crisis Investing in Cyprus. Companies that are still producing earnings, paying dividends, have plenty of cash (in most cases outside of the country), little to no debt, and trading for literally pennies on the dollar. What are your thoughts on Cyprus?

Jim Rogers: When I saw what you guys did, I thought, "That's brilliant, I wish I had thought of it, and I'll claim that I thought of it" (laughs). But it was really one of those things where I said, "Oh gosh, why didn't I think of that," because it was so obvious that you are going to find something.

It's also obvious, after what happened in Cyprus, that it's a place where one should investigate. Whether it is right to buy now or not, you are certainly right to look into it. If you stay with it and you know what you are doing, you do your homework, you are probably going to find some astonishing opportunities in Cyprus. It's the kind of thing that I'm talking about and that you are talking about.

(Editor's Note: You can find more info on Crisis Investing in Cyprus here.)

Nick Giambruno: Speaking of hated markets that literally nobody is getting into, I heard that you managed to find a way to get some sort of exposure to North Korea through bullion coins. Could you tell us about that?

Jim Rogers: Yeah, you know, it's illegal for Americans to invest in North Korea. It's probably illegal for us to even say the word "North Korea" (laughs). I look around to see which countries are hated. In North Korea there is no stock market, and there is no way to invest, especially if you are an American, but sometimes you can find something in a secondary market.

Stamps and coins were the only ways I knew of that one could get some sort of exposure. This is because you are not investing in the country, obviously, because you are buying them in a secondary or tertiary market. That said, I think the US government is going to make own
ing stamps illegal too.

There were people once upon a time—and maybe even now—who invested in North Korean debt. I have not done that, but it may be another way that people can invest in North Korea. I don't even know if North Korean debt still trades, but it was defaulted on at some point.

Nick Giambruno: Another hated market that actually does have a pretty vibrant and dynamic stock market is the Tehran Stock Exchange in Iran. Have you ever taken a look at this market?

Jim Rogers: Yes, at one point I did invest in Iran, back in the 1990s and made something like 40 times on my money. I didn't put millions in because there was a limit on how much a person could invest. But this was over 20 years ago. I would like to invest in Iran again, but I don't know the precise details on the sanctions and the current status of Americans being able to invest there. But Iran is certainly on my list. And so are Libya and Syria. I'm not doing anything at the moment in these countries, but they are places that are on my list.

Nick Giambruno: Switching gears a little, do you have any final words for people who are thinking about internationalizing some aspect of their lives or their savings?

Jim Rogers: Most people have a health insurance policy, a life insurance policy, fire insurance, and car insurance. You hope that you never have to use these insurance policies, but you have them anyway. I feel the same way about what you call internationalizing, but I call it insurance. Everybody should have some of their money invested outside of their own country, outside of their own currency. No matter how positive things are in your home country, something could go wrong.

I obviously do it for many other reasons than that. I do it because I think I can make some money finding opportunities outside your own country. Many people are a little reluctant, you know. It's tough to leave your safe haven. So I try to explain to them, "Well, you have fire insurance, why don't you look on investing abroad as another kind of insurance?" and usually what happens is people get more accustomed to it. And they often invest more and more abroad because they say, "Oh, my gosh, look at these opportunities. Why didn't somebody tell us there are all these things out there?"

Nick Giambruno: Jim, would you like to tell us about your most recent book, Street Smarts: Adventures on the Road and in the Markets? I'd strongly encourage our readers to check it out by clicking here.

Jim Rogers: I've done a few books before, and then my publisher and agent said, "Look, it sounds like it must be quite a story to have come from the back woods of Alabama to living in Asia with a couple of blue-eyed girls who speak perfect Mandarin. How did this happen? Why don't you pull this all together and it might be an interesting story?" So I did, somewhat reluctantly at first, and then, lo and behold, people tell me it's my best book. Whether it is or not, I will have to let other people decide, but that's how it happened, and that's what it is.

Nick Giambruno: Jim, thank you for your time and unique insight into these fascinating topics.

Jim Rogers: You're welcome. Let's do it again sometime.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PuoLZDTe9YA/story01.htm Tyler Durden

Submitted by Nick Giambruno via Doug Casey's International Man,

I am very pleased to have had the chance to speak with Jim Rogers, a legendary investor and true international man.

Jim and I spoke about some of the most exciting investments and stock markets around the world that pretty much nobody else is talking about.

You won't want to miss this fascinating discussion, which you'll find below.

Nick Giambruno: Tell us what you think it means to be a successful contrarian and how that relates to investing in crisis markets throughout the world.

Jim Rogers: Well, there are two aspects of it. One is being a trader, being able to buy panic, and nearly always if you are a trader or an investor, if you buy panic, you are going to do okay.

Sometimes it is better for the traders, because when there is a panic—a war breaks out or something like that—everything collapses, and some people are very good at jumping in and buying. Then, when the rally comes, the next day or the next month, they sell out.

Now, the people who are investors can also do that, but it usually takes longer for there to be a permanent rally. In other words, if there's a war and stocks go from 100 to 30 and everybody jumps in, it may rally up to 50, and then the traders will get out, it may go back to 30 again. I'm trying to make the differentiation between investors and traders buying panic.

As an investor, nearly always if you buy panic and you know what you are doing, and then hold on for a number of years, you are going to make a lot of money.

You also have to be sure that your crisis or panic is not the end of the world, though. If war breaks out, you have got to make sure it's a temporary war.

I used to work with Roy Neuberger, who was one of the great traders of all time, and whenever stocks would panic down, he was usually one of the few buyers, because he knew he could get a rally—if not that day, at least maybe that week or that month. And he nearly always did. No matter how bad the news, especially if there's a huge drop, it's probably a good time to buy if you've got the staying power and your wits, because you will likely get a rally. In terms of panic buying or crisis situations, that's normally the way to play.

Now, it's not always easy, because you are having everybody you know, or everybody in the media shrieking what a fool you are to even try something like that. But if you have your wits about you and you know what you are doing, and you know enough about yourself, then chances are you will make a lot of money.

Nick Giambruno: What is the story behind your most successful investment in a crisis market or a blood-in-the-streets kind of situation?

Jim Rogers: Certainly commodities at the end of the '90s were everybody's favorite disaster, and yet for whatever reason, I had decided that it was not a disaster. In fact, it was a great opportunity and there were plenty of things to buy. In 1998, for instance, Merrill Lynch—which at the time was the largest broker, certainly in America and maybe the world—decided to close their commodity business, which they had had for a long time. I bought. That's when I started in the commodity business in a fairly big way. So that's the kind of example I am talking about. Everybody had more or less abandoned or were in the process of abandoning commodities, and yet, that's when I decided to go into commodities in a big way, because of what I considered fundamental reasons for doing it, but the fact that Merrill Lynch was getting out buttressed in my own mind anyway that I must be right, because, you know, everybody was out. Who was left to sell? There was nobody left to sell at that point.

Nick Giambruno: What about a particular country?

Jim Rogers: I first invested in China back in 1999 and then again in 2005. The market at those times was very, very bad. I invested again in November of 2008, when all markets around the world were collapsing, including in China.

So I have certainly made investments in countries with crisis markets, and I'm getting a little better at it than I used to be, because I have had more experience now. That's why I keep emphasizing that you have to know what you're doing. And by that I mean paying attention to and doing your homework on a stock or a commodity or a country. If you do that with a crisis market, then chances are you can move in and make some money.

Nick Giambruno: In your opinion, which countries today do you think offer the best crisis or blood-in-the-streets-type opportunities?

Jim Rogers: I think Russia is probably one of the most hated markets in the world. I don't think many people have a nice thing to say about Russia or Putin. I was pessimistic on Russia from 1966 to 2012—that's 46 years. But I've come to the conclusion that since it is so hated—and you should always look at markets that are hated—that there are probably good opportunities in Russia right now.

Nick Giambruno: Doug Casey and I were recently in the crisis-stricken country of Cyprus, which is also a pretty hated market, for obvious reasons. While we were there, we found some pretty remarkable bargains on the Cyprus Stock Exchange which we detailed in a new report called Crisis Investing in Cyprus. Companies that are still producing earnings, paying dividends, have plenty of cash (in most cases outside of the country), little to no debt, and trading for literally pennies on the dollar. What are your thoughts on Cyprus?

Jim Rogers: When I saw what you guys did, I thought, "That's brilliant, I wish I had thought of it, and I'll claim that I thought of it" (laughs). But it was really one of those things where I said, "Oh gosh, why didn't I think of that," because it was so obvious that you are going to find something.

It's also obvious, after what happened in Cyprus, that it's a place where one should investigate. Whether it is right to buy now or not, you are certainly right to look into it. If you stay with it and you know what you are doing, you do your homework, you are probably going to find some astonishing opportunities in Cyprus. It's the kind of thing that I'm talking about and that you are talking about.

(Editor's Note: You can find more info on Crisis Investing in Cyprus here.)

Nick Giambruno: Speaking of hated markets that literally nobody is getting into, I heard that you managed to find a way to get some sort of exposure to North Korea through bullion coins. Could you tell us about that?

Jim Rogers: Yeah, you know, it's illegal for Americans to invest in North Korea. It's probably illegal for us to even say the word "North Korea" (laughs). I look around to see which countries are hated. In North Korea there is no stock market, and there is no way to invest, especially if you are an American, but sometimes you can find something in a secondary market.

Stamps and coins were the only ways I knew of that one could get some sort of exposure. This is because you are not investing in the country, obviously, because you are buying them in a secondary or tertiary market. That said, I think the US government is going to make owning stamps illegal too.

There were people once upon a time—and maybe even now—who invested in North Korean debt. I have not done that, but it may be another way that people can invest in North Korea. I don't even know if North Korean debt still trades, but it was defaulted on at some point.

Nick Giambruno: Another hated market that actually does have a pretty vibrant and dynamic stock market is the Tehran Stock Exchange in Iran. Have you ever taken a look at this market?

Jim Rogers: Yes, at one point I did invest in Iran, back in the 1990s and made something like 40 times on my money. I didn't put millions in because there was a limit on how much a person could invest. But this was over 20 years ago. I would like to invest in Iran again, but I don't know the precise details on the sanctions and the current status of Americans being able to invest there. But Iran is certainly on my list. And so are Libya and Syria. I'm not doing anything at the moment in these countries, but they are places that are on my list.

Nick Giambruno: Switching gears a little, do you have any final words for people who are thinking about internationalizing some aspect of their lives or their savings?

Jim Rogers: Most people have a health insurance policy, a life insurance policy, fire insurance, and car insurance. You hope that you never have to use these insurance policies, but you have them anyway. I feel the same way about what you call internationalizing, but I call it insurance. Everybody should have some of their money invested outside of their own country, outside of their own currency. No matter how positive things are in your home country, something could go wrong.

I obviously do it for many other reasons than that. I do it because I think I can make some money finding opportunities outside your own country. Many people are a little reluctant, you know. It's tough to leave your safe haven. So I try to explain to them, "Well, you have fire insurance, why don't you look on investing abroad as another kind of insurance?" and usually what happens is people get more accustomed to it. And they often invest more and more abroad because they say, "Oh, my gosh, look at these opportunities. Why didn't somebody tell us there are all these things out there?"

Nick Giambruno: Jim, would you like to tell us about your most recent book, Street Smarts: Adventures on the Road and in the Markets? I'd strongly encourage our readers to check it out by clicking here.

Jim Rogers: I've done a few books before, and then my publisher and agent said, "Look, it sounds like it must be quite a story to have come from the back woods of Alabama to living in Asia with a couple of blue-eyed girls who speak perfect Mandarin. How did this happen? Why don't you pull this all together and it might be an interesting story?" So I did, somewhat reluctantly at first, and then, lo and behold, people tell me it's my best book. Whether it is or not, I will have to let other people decide, but that's how it happened, and that's what it is.

Nick Giambruno: Jim, thank you for your time and unique insight into these fascinating topics.

Jim Rogers: You're welcome. Let's do it again sometime.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PuoLZDTe9YA/story01.htm Tyler Durden

We have tried a number of times (here, here, and here) to explain the simple math behind the populist call for a higher minimum wage (that appears to be founding the President’s new class warfare) but in the following clip, we hope, Peter Schiff visits a local Wal-Mart in the hopes of explaining that magic money trees are not real.

 

Posing as representatives of “15 for 15,” a make-believe organization advocating that Walmart raise prices by 15% and use the extra cash to pay its low-skilled workers $15 per hour (Schiff suggests that the surcharge be added to customer’s bills at checkout, just like a gratuity at a restaurant).

Not surprisingly few shoppers supported his cause. Even those who felt Walmart workers should be paid more did not want to pay higher prices themselves to make it possible.

Perhaps, as Schiff notes, those demanding higher wages for Walmart’s workers should consider the importance of low prices to Walmart’s customers.

 

 

Those who advocate across the board wage increases assume that the company can meet the additional payroll by simply dipping into profits. But with just $6,600 profit per employee any significant raise in pay will largely cut into profits, greatly alter return on equity, and force dramatic changes in the company’s operations. In truth the kind of pay raises envisioned by the activists, must lead to price increases. Advocates assume that shoppers will gladly support higher prices if they lead to higher wages for workers not higher profit for shareholders. Mr. Schiff’s experiment shows this hope to be delusional. If Wal-Mart loses customers, it will invariably lose workers. Do progressives assume that workers earning no pay would be less of a burden on society than a worker earning low pay?

Mr. Schiff would certainly agree that it is increasingly difficult, if not impossible, to raise a family on entry level Wal-Mart pay. But he argues that such jobs were never intended to be careers, but simply stepping stones for low skilled workers to gain entry into the labor force. The fact that the economy is now providing no other stones on which to step is not the fault of Wal-Mart. Instead, the better paying jobs that used to form the backbone of the middle class have been strangled by an out of control government that strangles businesses with excessive taxation and regulation

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3yrCuLL2oJI/story01.htm Tyler Durden