Category: Economics & Investing

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

The following recently ran in The Daily Bell, published in Appenzell, Switzerland: Euro Crisis to Set One World Currency? (OBTW, subscriptions and RSS feeds to The Daily Bell are free. I read it often, and recommend it.) Reader “Two Dogs” sent this interesting analysis: ObamaCare’s Economic Dominoes David R. sent us an op-ed by David Einhorn: Easy Money, Hard Truths. Here is a key quote: “According to the Bank for International Settlements, the United States’ structural deficit — the amount of our deficit adjusted for the economic cycle — has increased from 3.1 percent of gross domestic product in 2007 …

Brian B. mentioned this commentary by Robert Prechter: Gold Correction Factors, Hidden Dollar Swap Hammer. Signs of the times: Wait grows longer for Rhode Island tax refunds My old friend Fred The Valmetmeister wrote: “It looks like some of us will be paying a lot more tax next year – [in all] more than 50 percent [income tax]. The 35 percent [Federal income tax] rate goes back to 39.6 percent next year, plus state income tax (6.9 percent in my state) plus 3.8 percent to cover the new health care that just passed. I find it amazing that dividends will …

Craig S. spotted this bit of chartistry: Dollar Primed for Collapse by End June. Yes, the US Dollar is presently artificially strong. But we are looking at a study of relative weaknesses. All the major fiat currencies are in a race to the bottom. Don’t make the foolish mistake of swapping from one un-back currency into another. Instead, swap into tangibles! Brian B. and Jon M. were the first of several readers who sent this: US money supply plunges at 1930s pace as Obama eyes fresh stimulus. The money multiplier effect works in reverse, as credit collapses. But at some …

SurvivalBlog’s Poet Laureate George Gordon (“G.G”) flagged this article by veteran prepper/economist Howard J. Ruff: Gold and Silver Insurance Also from G.G.: Italy Banning Cash Transactions Over €5,000 As Latest European Austerity Package Revealed One more from G.G.: Number of the Week: 75% Chance of Greek Default Moody’s Reiterates U.S. Spending Risks Credit Rating Jim D. suggested this article by Mish Shedlock that illustrates the incredible depth of California’s budget crisis: California to borrow next 20 years worth of bottle returns. Items from The Economatrix: Falling Home Prices Stir Fears of New Bottom Consumer Confidence Up Again Factory Orders And …

Brett G. highlighted this news article: Roubini Predicts 20 Percent Stock Market Fall Also from Brett: 25 Questions to Ask Anyone Who is Delusional Enough to Believe That This Economic Recovery is Real Reader M.S.B. sent this piece by Egon von Greyerz: Hyperinflation Guaranteed Jonathan C. forwarded this: Global Banks May Need $1.5 Trillion in Capital, Study Says Also from Jonathan C.: FDIC Closes on Sale of $233 Million of Notes Backed by Commercial Real Estate Loans. Jonathan’s comments: Reading between the lines of the $233 Million sale is the fact that it is a 77% discount since the assets …

Reader P.D. flagged this: One false move in Europe could set off global chain reaction G.G. sent this: Nouriel Roubini: “We are still in the middle of this crisis and there is more trouble ahead of us” Dave D. was the first of several readers to mention this article: New rules might not stop next financial crisis; After Senate debate, passage, many loopholes exist in regulations. At issue are those uncontrolled derivatives–finally being recognized asa threat by the mainstream media. Brian B. forwarded this CNBC piece: Global Markets Now Infected with Europe Fear On the lighter side, comes this comedy …

JWR: When I first started investing in precious metals, I was very unsure of how to do it. My first problem was to find a place that sold them. That is no mean feat in Canada. Naturally my first response was to buy paper metals. As an investment, these were cheaper and more convenient to buy and sell than taking physical possession. When I decided that it was important to take physical possession, I was faced with the problem, how do I buy an ounce of gold without getting burned by fluctuating prices. For the last five years, I have …

K.S. suggested this article by Chris Blasi: Is Your IRA or 401K a Target of Government Appropriation? British Expert: Great Depression II is Possible. (Thanks to Steve C. for the link.) Reader Brian B. sent us this: California pension fund asks state for additional $600 Million. Thanks to Sue C. for spotting this: Crisis in Europe raises ‘double-dip’ recession worries Items from The Economatrix: Chrysler Adds 1,100 Jobs At Detroit Jeep Plant Even A Trillion Can’t Save The Euro City Fears “Great Depression Mark II” German Finance Minister: Markets Out Of Control Loan Demand to Buy US Homes Sinks to …