Category: Economics & Investing

Mark Skousen: Gold Surge Points to Higher Inflation Reader Isaac S. sent this: Greenspan Says US May Soon Reach Borrowing Limits The latest bank casualty in the FDIC’s Friday Follies: Nevada Security Bank. (It is notable that the pace of bank failures is more than double last year’s.) Items from The Economatrix: Fannie-Freddie to Delist Shares from NYSE Coffee Prices Jump 20% in One Week Deficit Terrorists Strike in the UK Job Woes Persist as Jobless Claims Rise Ambrose Evans-Pritchard: The Euro Mutiny Begins

Eric Sprott: Gold Running in Short Supply. (Thanks to Todd for the link.) Sharp Shepherd sent us this: More Than 90 Banks Miss TARP Payments Items from The Economatrix: Gold is an Armageddon Hedge Uncertainty Restores Glitter to an Old Refuge, Gold How All Of Us Pay for The Derivatives Market (Caution: There is a bad word in the title…..) It’s The Ratios, Stupid (Why the US Will Default on its Debt) Wholesale Prices Fall 0.3 Percent in May Home Construction Sinks, Building Permits Down The Snowball Scenario Sinks Sovereigns World Bank Says China’s Economy Slowing

And so, inexorably, the The Mother of All Bailouts (MOAB) grows: Obama Officially Begins Push For New Bailout of the States. (Thanks to G.G. for the link.) D.D. sent this: “Housing Still Sluggish”—Harvard study uses the “D” word to describe the real estate market From the ever-cheery Ambrose Evans-Pritchard: AXA fears ‘fatal flaw’ will destroy eurozone. (Thanks to G.G. for the link.) Y.K. suggested a recent audio podcast interview of Gerald Celente by Lew Rockwell. Brett G. flagged this: Volcker Warns: We Are Running Out Of Time Items from The Economatrix: EU Chief Warns “Democracy Could Disappear” in Greece, Spain …

Evan D. suggested this: The Death of Las Vegas. Niall Ferguson: Debt Has Taken Down Empires Before, There Is No Reason Why It Won’t Happen Again. (Thanks to Eric J. for the link to the lecture. JWR Adds: Don’t miss his discussion of “The Metrics of Doom”, starting about 28 minutes into the video. Europe Troubles Are About to Start: Wilbur Ross (Thanks to Brian B. for the link.) Kevin A. sent this incredible article: State Wants to Borrow From Pension Fund, to Pay the Fund. The article begins: “Gov. David A. Patterson and legislative leaders have tentatively agreed to …

The mainstream media finally raises serious alarm about derivatives: Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP.(Thanks to JDD for the link.) FWIW, I’ve been warning about this since 2006. Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case. (Thanks to Brian B. for the link.) Scott S. call this article at Zero Hedge a “must read”: Extend And Pretend – A Guide To The Road Ahead Reader P.D. spotted this: 20 More Signs of a Full-On Economic Collapse SurvivalBlog’s Poet Laureate, “George Gordon” sent us this: Number of the Week: Default, Not Thrift, Pares U.S. Debt A …

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 …