Weekly Comments

What could possibly go wrong?

We have surging energy costs that are crippling both industry and families in Europe and Asia. Companies are closing because of the excessive cost of natural gas. This is leading to far less products being produced. Some industries impacted are fertilizer, ammonia and food production. On the family side many are being stunned by higher energy costs PRIOR to the winter season when most energy is used to heat homes. This is similar to what happened in Texas when their green power grid froze and prices spiked uncontrollably. In that situation as the weather moderated the problem went away. In the Eurozone situation we have not even entered late fall so this may last a while.

While we are going to hear many reasons why this is happening it appears to me that the truth is clear. It appears the people who want to outlaw carbon output have made a grave error. While their intentions are noble, they have gone about this in a way that will likely backfire and cause many people to suffer.

We have politicians that want Zero-carbon by 2030 or 2050. The problem is that these people are politicians who likely have little, if any, knowledge of the situation.

I believe that these “goals” are likely attainable if done correctly. The problem is the “woke” culture is alive and well and the companies that produce what we need to live and power our lives are being vilified and denied funding. This is leading to less exploration, less production and higher prices.

If there were viable alternatives at this time the plot may have worked but the fact is that we have nowhere near the capacity we need without fossil fuels and nuclear reactors. The Germans- I guess to show how “compliant” they are banned nuclear power from being produced in Germany. What they do now is IMPORT the nuclear-powered energy from France because they have found they can’t survive without it. It is stupidity like this from those at the top that make the rest of us suffer.

This is a global problem and could lead to FAR higher prices as the cost to ship goods is going through the roof also. Not only is oil, gas and many other commodities rising rapidly but a friend of mine who imports from China reports that the cost of a shipping container last year was $4000.00 and this year is $25,000.00- IF YOU CAN FIND ONE. Even if you do your ship may be anchored off California for quite a while. Order Christmas gifts NOW.

I can’t help but believe that Mr. Putin could put an end to the madness if he wanted to but I believe he will not make that move until his new pipeline bypassing Ukraine is up and running. I believe he knows how to get his way-particularly when he appears to be holding all the cards.

Isn’t it amazing? Those who think the central banks can just “print” us out of trouble are getting a real lesson in the real world. The “printing” creates nothing but the illusion of purchasing power- and that is even reserved for those at the top. It is no surprise to me that we have been buying STUFF that has been purchased with a currency unit that has no labor or production to give it any actual value.

This is also likely the reason that China, Russia and most other central banks are buying gold and other hard assets. This “printed” confetti is now being exposed for its lack of actual value because of limitless amounts being “printed” at virtually no cost.

I ask many times “What is the value of a promise that cannot be kept?” I am asking about companies that are drowning in debt and being kept alive with more and more debt- basically making them more insolvent day by day. I am talking about MANY bonds- Munis, Corporate, State and even US Treasuries. Many will likely default at some point. Many will say- not the Treasuries. I hope not BUT they will likely default in a way 99% of people will not understand. The dollars will likely be paid but the VALUE will be worth maybe 10% of what you expected to receive. What is the value of an “asset” that can be conjured up out of nowhere at virtually no cost or effort? My guess is it is about the same as a promise that cannot be kept.

The real tragedy here is that it appears we are only in the very beginning of an ugly inflation cycle. With the cost of raw materials spiraling out of control there is very little room for companies to raise wages to keep pace. Already most homes are unaffordable to our younger generations. Many who are buying today are literally mortgaging their futures with jumbo mortgages, car loans, student debt and even revolving credit to give the illusion of wealth.

If debt were wealth the USA would indeed be the richest nation in the history of the world. Unfortunately, I believe it is this illusion of wealth which will likely lead to our downfall.

I believe we have already devolved into a third world nation. Those at the top trade in “markets” with inside information, are involved in naked shorting and many other activities that would lead a regular guy or gal in jail for a long time. There are obviously two sets of rules.

I wish I could laugh but the joke is on us.

My only idea here is to buy what they are buying like gold, silver and other hard assets. I believe these type of things are far more likely to preserve purchasing power going forward and unlike paper assets cannot go to zero so if they do fall in price the value still exists and you can wait for the price to recover. Remember- there is no way to recover from zero in a debt default or corporate bankruptcy if you are a shareholder.   

A million times zero = ZERO.

Be Prepared!

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