Mubarak Steps Down, Oil and Gold Names Follow

February 11, 2011

The Egypt situation is, as they say, “fluid.”

With the latest news that Mubarak is stepping down after all, crude oil is again dropping like a hot rock, a “risk on” profile has returned to markets in general, and gold stocks have turned tail to give up all previous gains on the day.

Now that the strongman is out, so are we — of our profitable basket of gold stocks that is. With the transports confirming and merger Monday coming up, an extension of the relief surge could weigh on the yellow metal here.

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2 Responses to Mubarak Steps Down, Oil and Gold Names Follow

  1. Mike C on February 13, 2011 at 7:36 pm

    I know you've been active in the MMT discussions/debates. Not sure if you saw this, but an interesting comment on MMT:

    IMO, the question ALL MMTer's seem to dance around is how does one put sensible limitations on the government creation of money. How does one limit/control the amount of totally wasteful/unproductive spending once you accept the notion the government can spend into existance whatever amount of money it wants?

    • Jack Sparrow on February 13, 2011 at 8:05 pm

      Cheers, thanks for that.

      Agree, re, MMTers being neo-keynesian spendthrifts in disguise, and that angle was thoroughly dissected in the huge comment thread born of the MMT Seeking Alpha post:

      The main issue that MMTers have with debt doomers is neglecting the positive side of the U.S. balance sheet. As 25% of the global economy and a technological, agricultural and military superpower, America has a deeper advantage (leverage capability) than some will admit.

      At the same time, I find the blunt criticisms of MMT more or less correct — in pointing out the low likelihood of Zimbabwe, they skate right past the dangers of bad policy leading to more plausible bad outcomes, like, say, a return of extreme stagflation.

      As for limits and controls, those will be imposed either internally or externally — internally by folks like Ron Paul and others who finally say "enough is enough" and get the country to agree, or externally by deteriorating finances at the margins as dollars are shunned and bonds are monetized.

      Where people get mixed up is in forgetting all this stuff comes down to nuance, subtlety and degrees — there is a whole spectrum of outcomes between "everything's fine" and "financial armageddon," rather than the commonly black and white boxes of popular debate.

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