Category: Economics & Investing

The Mother of All Bailouts (MOAB) continues to grow, just as I predicted: Congress considers more stimulus as economy shows signs of slowing. (A hat tip to David D. for the link.) Also from David: Dallas Fed Chairman: White House (& Congress) “Dead Wrong” on Financial Reform. David’s comment: “Talk about dissension in the ranks, I think this would qualify. I’m surprised Mr. Fisher hasn’t been replaced yet.” Japan’s Prime Minister Naoto Kan warns of ‘collapse’ under debt pile. (A hat tip to Lee C. for the link.) By way of The Drudge Report: Euro to hit dollar parity in …

G.G. flagged this item from McNewspaper: Bankruptcy filings are nearing the record 2 million of 2005 Also from G.G. come this item from the Australian branch of The Daily Reckoning: The Housing Non-Recovery Frequent content contributor RBS sent this: Silver? The Swiss franc? Fear sends investors to safety Items from The Economatrix: Too Much Risk: $1.2 Quadrillion Derivatives Market Dwarfs the World’s GDP Hedge Funds Hit in “Monstrous” May Bernanke All But Rules Out Double Dip Inflation Corroded Copper Coins (The Mogambo Guru dispels the coinage “hoarding” myth.) 50 Statistics About the US Economy that are Almost Too Crazy to …

Evan D. mentioned this article: Next bubble: Corporate bonds..or stocks The BBC reports: Finland in double-dip recession. (Our thanks to Evan D. for the link.) By way of The Daily Bell, we read: Britain Becomes The First To Choose Deflation Reader S.M. sent us this: Bernanke Puzzled by Gold Rally. Obviously, Helicopter Ben doesn’t understand that gold is a proven hedge against both inflation and deflation. Thankfully, Mr. Market isn’t fooled by such political pronouncements. When I last checked, spot gold was at around €1,018 per troy ounce. This is near its all-time high in Euro terms. In my estimation, …

It appears that $1,200 per ounce has become the new price floor for gold. With more global financial turmoil surely ahead, we ain’t seen nuthin’ yet for the precious metals. If you feel like you’ve missed the boat, don’t. It’s not too late to buy on the dips. (The top will be much higher than today’s price levels!) Silver is a better choice than gold for most investors. But of course I’ve been saying that ever since I called the bottom of the market, back in February of 2001. That was just a couple of months before its actual low …

Brett G. sent us this troubling article: Treasury Report: US Debt to Skyrocket to $19.6 Trillion by 2015. Hmmmm… Lets’s do the math: The current “official debt” is around $12 Trillion, which is around 93% of our GDP. And $19.6 Trillion would be a 63% larger debt. If the economy doesn’t grow, then that means that by 2015 the debt will be…uh-oh. And as a data point, Greece is presently in a full-blown crisis that is about to crater the Euro, because their debt got to 130% of GDP.) Kevin S. sent this: Sovereign Credit-Default Swaps Surge on Hungarian Debt …

R.D.H. sent this: Gold Rises to Record on Demand for Haven From European Crisis. Reader David S. suggested this piece by mainstream economic journalist Scott Burns that was surprisingly frank about the possibility of an economic collapse: The Future… as a Large, Sullen Stranger G.G. liked this commentary by Robert Barone: Forget PIIGS, US Debt is Out of Control Brian B. sent this item by our friend Bill Bonner: US government is killing its own economy J.D.D. highlighted this: Long-Term Unemployed Now 46 Percent of Unemployed, Highest Percentage on Record Items from The Economatrix: Increasingly Hawkish Fed Ponder Raising Rates …

Several readers sent this: U.S.’s $13 Trillion Debt Poised to Overtake GDP: Chart of Day Brett G. sent us this: Experts: Europe to Push US Back Into Recession Mac F. liked this essay by Monty Pelerin: Worse than a Depression Complexity and Collapse: Empires on the Edge of Chaos by Niall Ferguson. (A hat tip to Thomas P. for the link.) Laura Bassett reports: Disturbing Job Ads: ‘The Unemployed Will Not Be Considered’ (A hat tip to Simon J. for the link.) Items from The Economatrix: Central Bank Gold Holdings Expand at Fastest Pace Since 1964. (Why do central bankers …

Frequent content contributor R.B.S. sent us this: How a Bursting Housing Bubble in China Could Slam the U.S. Also from R.B.S.: China Freaks Out The World By Announcing Restrictions On Export Of Metals Crucial For National Defense Chad sent us this: Hungary warning heightens sovereign-debt fear; Default concern rises as new government says predecessor lied about finances G.G. suggested this interview: Jim Rogers on Currencies and Inflation Items from The Economatrix: Gold’s Record-Breaking May Madness The Central Banker’s Dilemma No. European Nations Preparing to Slaughter the PIIGS Student Loans: Another Debt Crisis Brewing Four-Day School Week Due to Budget Cuts …

Joseph C. sent a link to this: Why U.S. debt matters to you Trent H. flagged this: For Some Homeowners in Foreclosure, a Rent-Free Approach. Trent’s comment: “This attitude is astonishing and disappointing. The attitude that ‘the banks are crooks’, and thus its okay to behave similarly is frightening.” From Brian B.: Federal debt tops $13 trillion mark. (And that doesn’t include the massive future obligations like government pensions) Why a ‘new euro’ could be the saviour of the European dream. (Thanks to L.R. for the link.) Items from The Economatrix: First-Time Jobless Claims Drop for Second Week Retailers’ Reports …

SurvivalBlog reader H. in Quebec asked me to summarize my view of the current economic situation, and asked what is coming next. In essence, the recession will likely turn into depression that may last for decades. What is ahead? This is what I wrote in early 2008: “The current financial instability is just the beginning. Before this is over, the debt crisis will start an avalanche that will bankrupt countless individual investors, institutional stockholders, hedge funds, stock trading companies, municipalities, banks, S&Ls, and insurance companies. Since the magic money tap will be turned off, both residential and commercial real estate …

U.S. Inflation to Approach Zimbabwe Level, Faber Says. (Thanks to Brian B. for the link.) Reader Matt in in Tennessee notes that the animated national unemployment map (mentioned before in my blog) has recently been updated to include data from March, 2010. Matt’s comment: “The map grows darker and darker…like a cloud that hints of an impending storm.” Joe K. mentioned that someone is auctioning one million copper pennies on eBay. That’s 7,000 pounds of copper! G.G. sent us this: U.S. Mint’s May gold coin sales reach most since 1999 Courtesy of reader Becky P.: Greece Urged to Give Up …

Michael H. suggested this article: Is Europe heading for a meltdown? Mervyn King, the Bank of England Governor, summed it up best: “Dealing with a banking crisis was difficult enough,” he said the other week, “but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there’s no backstop.” Roubini: World at Risk of Double Dip Recession for Years. (A hat tip to Brett G. for the link). Brett’s comment on article: “Wouldn’t that be called a Depression’?” Thanks to Brian B. for sending this: …

Reader H.H. recommended a speech by economist Marc Faber, titled Mirror, Mirror, On The Wall, where he talks about what will be the next entity like AIG to fall. At minute 54, he says to buy a house in the middle of nowhere” to avoid the various forms of social unrest he believes is coming. He also recommends, of course, that you buy physical gold as a hedge against inflation. It sounds like he’s now in accord with economist and investing guru Barton Biggs, who has also recommended buying retreat property: “Your safe haven must be self-sufficient and capable of …

El Jefe Jeff E. spotted this: Bankruptcy talk spreads among California muni officials Reader A.P. liked this article over at Fox Business: Is the World Broke? Entitlements, Spending May Spell Doom Reader J.H. sent a link to a piece by Jim Jubak: Euro crisis is tip of the iceberg; What we see is scary enough, but the hidden part is something virtually every nation will have to navigate around during the next couple of decades Items from The Economatrix: Gulf Oil Spill Impact Will Be Long-Term New, Giant Sea Plume Seen in Gulf Storms Could Cross Massive Gulf Oil Spill