Buy 'em while they're cold

What do we hate? Commodities. When do we hate them? Now.

A few years ago they were the cat's spats. China would devour materials into its bottomless maw. Grand Master Jim Rogers had his 15 minutes, every day. Stocks, other than mining company or agriculture company stocks, were your ancestors' investment. Minerals, fluids, sprouts: that was your seat in the front cabin to wealth.

In case you haven't noticed, the Wise Elders now give a look like your drain has backed up when you talk about commodities. Gold and silver have fallen back into the earth's gravitational field. Copper,  you might as well use it to make pennies. China? Not the insatiable consumer of raw materials after all. Their brand of crony capitalism for the moment seems to be guaranteeing economic brilliance about as well as ours is.

Europe will collapse into negative space and drag the rest of the world with it. Who's going to be dumpster diving for materials?

This whispers in Ghost Money's ear: Time to buy. Commodities are on sale, sweet sale. Don't wait for the moving lips on CNBC to tell you it's right. By then they'll be talking their book and you'll be bidding it up for them.

Buy the drillers and the miners and the growers. Oh, one other thing: then you wait. Most of us investing fools lack that talent.

I own shares of ExxonMobil. I like a company that laughs at hot and cold markets. They don't care if their stock is down $2 today; they don't care if Rance Seleucid & Co. downgrades them from "weak buy" to "strong hold" next week. They're planning for 20, 30 years from now.

That doesn't mean you don't need to be selective and do your research. I was knocked sideways seeing how cheap Freeport-McMoRan Copper & Gold was the other day. Copper will be top of the pops again and the old crew will be nicking telephone wires for the black market. Gold? They're singing my song.

I was set to plunge some of my hard-earned specie into Freeport (FCX) but I read up on it. That changed my brain. They have two main reserves: Indonesia and the Democratic Republic of Congo. Which is to say nationalist politics and corruption are the sphere they move in. They have no choice. Ghost Money isn't casting aspersions on FCX, merely saying that whatever agreements they've signed with those regimes aren't worth the ink they're printed with. 

It doesn't worry me that ExxonMobil is doing an extraction deal with Russia. ExxonMobil is a larger and more powerful country than Russia.

Keywords: [Commodities] [gold] [copper] [ExxonMobil] [Freeport-McMoRan]

Ghost Money's author does not claim to know what he's talking about. He is not an investment advisor. This site is for entertainment, if it can even manage that.

Public worker layoffs "hurt recovery" -- guess the source

No prizes. It's too easy.

Government payrolls grew in the early part of the recovery, largely because of federal stimulus measures. But since its postrecession peak in April 2009 (not counting temporary Census hiring), the public sector has shrunk by 706,000 jobs. The losses appeared to be tapering off earlier this year, but have accelerated for the last three months, creating the single biggest drag on the recovery in many areas. ...

If governments still employed the same percentage of the work force as they did in 2009, the unemployment rate would be a percentage point lower, according to an analysis by Moody’s Analytics. At the pace so far this year, layoffs will siphon off $15 billion in spending power. Yale economists have said that if state and local governments had followed the pattern of previous recessions, they would have added at least 1.4 million jobs.

[The New York Times]

Let's unpack the implications of this article: 

1. The way to recovery is for government to hire more people, so the government hires can spend more. Government head count reductions are thus a "drag" on the recovery, which must be happening -- after all, King Barack "Big Ju-Ju" Obama is on his throne.

2. The government (federal, state, and local) has billions of dollars just sitting around, which it could easily use to hire more people.

Writers for the Times and most of the mainstream media cannot understand the basic principle that a real recovery can only occur when wealth is created by companies and their employees, when they produce goods and services they can successfully market. 

Putting more government time servers into pod farms creates no wealth. It's a dole, a simple transfer payment from those who can be taxed to a politically selected group of recipients.

The government has no money. It has $13 trillion (unless the deficit has gone up by a few trillion since I checked last) less than nothing, and that's only at the federal level. Many states and localities are at an equivalent level of fiscal embarrassment. To hire more people, states and localities (which, unlike the Fed, can't "create" money out of thin air) would either have to tax more or borrow more.

Chances are, they could do neither; would you lend California a few hundred million? But even if they could, it wouldn't solve anything. Why prime a pump while draining the water from the well? That's it -- there's no "on the other hand."
 

The 55 percent

Imagine a ship with 100 passengers and crew drifting down a river that eventually cascades over a 1,000 foot waterfall. It's easy to plot the ship's course and the waterfall ahead. You might think 100% of those onboard would agree that something drastic must be done to either reverse course or abandon ship, but before we jump to any conclusion we must first identify what each of the 100 people perceive as serving their self-interest.

If life onboard is good for 55 of the 100, they may well rationalize away the waterfall dead ahead. Indeed, they might vote to maintain the current course, thus dooming the 45 others who can hear the thundering cascade ahead but who are powerless to change course in a democracy. ...

If 55% of the voting public is dependent on government spending, then they will vote to continue that spending regardless of its unsustainability.

[Charles Hugh Smith at Financial Sense]

Some people will read "dependent on government spending" and think of the underclass: dole money, food stamps, pay-per-child programs, government-issued processed cheese slabs, etc. That's only part of the story, and maybe the smaller part. 

The social work Establishment that administers welfare is equally dependent on government spending. All the workers at government bureaus and agencies, including the minority that perform useful functions, are dependent on government spending. The "green" corporations with politically correct products -- or ideas for products -- are dependent on government spending. 

Farm industry welfare (crop subsidies, export subsidies, subsidized insurance) is another form of government dependence. Some military suppliers wouldn't make a dime without the government as customer.

Scratch the "free enterprise" system and you find government dependence right down to the ground. Not all government support is bad or unnecessary; it's just that it has become pervasive, the path of least resistance for everyone from job seekers to corporations to elected officials. The river is the path of least resistance through the jungle. 

Did anyone hear a sound in the distance?

That Lamborghini? Oh, it fell off a truck

What do you do if you want to purchase a Lamborghini Murcielago but only have $66,000? If you live in China, you buy a knock-off.

  [Edmonton Sun]

Uh, would you take $5,000? ... $5,050? ...

Lose 500 pounds in one hour!

Visit a London casino.