Great Throughts Treasury

"Two major nations are well known for the government’s direct support of the stock market by buying ETFs or investment funds. The US support actions are not publicized."

"At an important top, things always look like they can?t get any better. And they can?t. That?s what makes the top."

"Looking forward, I can?t understand where any good news is going to come from. We have our analysis and scenarios we go through and every day we review everything and ask if anything has changed that would make us wrong in our predicdtions or confirm our analysis. Today we found out that China has cancelled a 300 ton soybeans order from the U.S. What does it mean? Does China have too many soybeans? Are the Chinese people not hungry? Are prices too high?"

"China?s institutions are different. What we experienced was a financial crisis where institutions went out of business or had to be bailed out. The repercussions were actually a downturn in the U.S. economy. In my opinion, the next crisis will be an economic crisis for the U.S. and globally where all the stimulus that has been put into system is wearing off and has less and less effect in helping the economy. I see signs that it?s being counterproductive."

"Right now we have 80 to 90 percent of Treasury securities purchases being conducted by Fed through their stimulus. When the Treasury finances all their expenditures with freshly printed money, you can see in history how this will end. There will be no happy ending to this. Can you imagine when you see real inflation rising, could be 10% or higher, what will people say? Finally they?ll have to stop inflation. When there?s the smallest sign that the Fed is reversing course you?ll see a collapse in financial markets. Whenever it comes, be it next year, 5 years or more; it?s coming."

"The Chinese government may not be able to continue these bailouts eventually. In the future that will be the limiting factor. Emerging markets like China have always been a problem when money starts flowing out. Foreign capital flows out and then the problems begin. We saw this late last year and earlier this year and discussed it in our China Boom-Bust Analyst newsletter. Foreign direct investment has since gone from largely positive to negative. Money is flowing out of China. For emerging markets that?s always the first big warning sign of an approaching crisis. China has more foreign currency reserves than others; it will delay the problem but not cancel out an eventual crisis. When China goes into severe contraction, the world economy will suffer."

"The Fed?s monetary policy is destructive if you look behind the scenes. It gives the central banks no way out. The Chinese government is doing everything it can to keep its banks afloat. For instance, the banks in China have 21 trillion dollars worth of loans. That?s a huge amount considering there are only 3 trillion in China?s reserves. It?s estimated by accounting firms that bad loans on banks? books is as much as 40-50 percent of total loans. That?s 10 trillion in bad loans on the books total and it?s unsustainable. This could cause a huge crisis."

"In China you see it every step of the way; everything is controlled by the government. Unless China finds someone like Gorbachev to dismantle the Communist regime, China will languish and its growth will decelerate. The private sector is over there is already in recession. The GDP numbers which they advertise at 7 percent is totally phony. The government says people shouldn?t use it as being accurate, but as a ?guideline? [laughs]. It?s being overstated and the numbers are unreliable. To measure what?s really happening we use private sector numbers like electrical consumption, which has declined for 1 « years. How can this be if China?s economy is growing?"

"This will be like a tsunami going through the economies of the globe. China has been the big locomotive for the world economy. China?s stimulus was four times the size per GDP than that of the U.S. They were four times as aggressive as the U.S. Fed in stimulating their economy. This caused a commodities rebound, stock market rebound, etc. Australia was also affected by China?s demand for commodities."

"Never let a small loss turn into a large one. Take small losses quickly and let profits run"

"What everyone knows is not worth knowing."

"We had seen the greatest credit bubble ever created by mankind. The implosion of that bubble will lead to the opposite extreme, and no man, government, central bank, or all of them combined will be intelligent enough to prevent that calamity."