Category: Economics & Investing

This may be one of the most important pieces of economic news in many months, yet is did not receive much mainstream news coverage when the wire story was circulated yesterday: Beijing’s derivative default stance rattles market. This implications of state-owned Chinese industries being given carte blanche to nullify derivatives contracts are enormous. You’ll probably recall that I have been warning about derivatives counterparty risk for almost three years. And it was there that I specifically warned about the risk of “disappearing counterparties”. This new turn of events will likely shake the very foundations of the global derivatives markets. If …

Brendon sent this: “Zombie suppliers” haunt manufacturing sector From H.H.: Italian banks may take ham and wine as collateral Cut my pay … please! As the number of layoffs mount, more workers are ready and willing to take significant pay cuts to find employment. (Thanks to Ben M. for the link.) From DD: Small retailers feel sharper pinch; Cuts in consumer spending hit mom-and-pop shops hard Reader KAF spotted this: As Banks Repay Bailout Money, U.S. Sees a Profit U.S. Stocks Fall After China Markets Trigger Global Sell-Off Damon flagged this: Daily Commodities Fundamentals: China Takes An Overnight Plunge, Oil …

Sir, I have a question what is the metal makeup of dimes [US 10-cent coins]. I am saving the nickels [US 5-cent coins, as suggested in SurvivalBlog, since 2007]. I have a small amount of dimes and was wondering if they are worth saving? – Curtis M. JWR Replies: Stockpiling dimes would not be wise. See the base metal value data at Coinflation,com. As of Saturday, August 29th, the base metal value of a post-1964 dime is $0.01704, (less than 2 cents) but the acquisition cost fro each coin is the face value of ten cents. Meanwhile, the base metal …

Mr Rawles,s My family really enjoys and has benefited from reading your blog. Thank you for putting together such a quality reference site. One topic I have not seen discussed (even after a search of the archives) is whether or not pre-1960s foreign silver coins have any value. As a child, I received a large number of European coins from my grandfather (circa 1920s to 1930s), many of which are silver and a few appear to be bronze. While they have little value to collectors based on condition (I have kept them for sentimental reasons), I would assume that silver …

Brad H. sent this from Capitalism magazine: The Collapse of America? The Dire Message of Mr. David Walker Detroit sets record for unemployment–28.9% (Thank to Paul B. for the link.) Items from The Economatrix: Arnold Holds Great California Garage Sale To Help Economy How Goldman Sach’s Problems are Hurting You US Economy: Spending Climbed in July Due to Clunkers Program Japanese Economy Hit by “Double Nightmare” Bankers’ Excesses…At Our Collective Expense Tsunami of Broke and Desperate Americans Fed urges secrecy on banks in bailout programs (A more accurate headline would be: “Fed Warns The Truth Will Destroy The Economy”) Japan …

From Reader GG: Poll: 34% of U.S. Workers Surveyed Have Only One Week or Less of Savings to Cover Expenses if Laid Off from Work. We are a nation of debtors, not savers, and someday that’s going to bite us. Regulators Shutter Three U.S. Banks, Bringing 2009 Total to 84 Reader A.C. kindly sent all these items that he gleaned from News Max Money News: Not All Stimulus Needed Global Recovery Not the Same as Equity Recovery The Deflationists Just Do Not Get It Germany and France Not So Hard-Hit by Recession China Meltdown Could Boost the Dollar And these …

Bill T. sent us this: 2009 Nickel & Dime Minting Stoppage. “The editors of Coin World have reported that the U.S. mint, as of April 23, has ceased minting 2009 nickel and dime issues. The mint has claimed that a precipitous drop in demand from the Federal Reserve for circulating coinage was the primary reason to cease production.” I found this linked at Drudge: ‘Problem’ Banks Rise to 15-Year High on Bad Loans, FDIC Says From Karen H.: Dollar May Surpass ‘Established Lows,’ Goldman Says GG sent us this: Preparing for a major bank shakeout; Rising failures and a weak …

Got Rhodium? World faces hi-tech crunch as China eyes ban on rare metal exports. (Thanks to Jeremy M. for the link.) GG sent us this: China Tears Up America’s Credit Cards Trent H. spotted this: The Dollar Will Fall, The Only Question is “When?” From John S.: “In the Tank Forever”: U.S. Consumers, Retailers in a “Death Spiral,” Davidowitz Says 1,000 Banks to Fail in Next Two Years (Thanks to Heather H. for the link.) Items from The Economatrix: Government Agency that Insures Deposits May Need Lifeline of its Own Number of Problem Banks Surges to 416; FDIC Fund Shrinks …

Dan D. recommended this post and video clip from Mish Shedlock of Australian economist Steve Keen: Global Debt Bubble, Causes and Solutions CRW sent a link to a great video on YouTube: Preparing American for Hyperinflation. The voters demanded “Change”, and here is what they got: Obama Nominates Bernanke for Second Term as Fed Chief. I guess some things don’t change. Be ready for inflation, folks. K.L. sent this Wall Street Journal article: As Budget Deficit Grows, So Do Doubts on Dollar Items from The Economatrix: Auto Industry Braces for Hangover After “Clunker” Party Dr. Housing Bubble: Real Homes of …

Tsunami of Home Foreclosures to hit U.S. (A tip of the hat to Heather for the link.) Court Orders Federal Reserve to Disclose Emergency Loan Details (It’s about time!) DD sent us a link to this Newsweek article: Slums of Suburbia Sorting through the rubble of California’s foreclosure tsunami. JWR’s comment: They were Living Large for a while, on NINJA loans, now they are Living Lard, in Manteca. Also from DD: White House, Congress project record deficits; Both see the overall national debt nearly doubling over the next decade From Chris: Senator warns of hyperinflation rivaling the 1980s Greg C. …

Analyst Bove sees 150-200 more U.S. bank failures (Kudos to Krys in Idaho for the link.) Jeff D. flagged this: Remember me? Wall Street repackages toxic debt From DD: There’s No Will to Fight Inflation Also from DD: Housing crisis set to enter new stage Nouriel Roubini warns: The risk of a double-dip recession is rising Items from The Economatrix: Fed to Steal State Pension Funds Insurers’ Biggest Writedowns May Be Yet to Come Celente: 2.5 Million Jobs Lost Since Obama’s Presidency The Travails of Small Business Dooms the Economy By the always insightful Charles Hugh Smith: So Long, California …

The other shoe has finally dropped: China reduces holdings in US debt. Expect more of the same in the months to come. (Thanks to Dave S. for the link.) From GG: Mounting joblessness fuels US housing crisis Noah was the first of several readers to mention this article about the failure of the second largest US bank of the year: Bank Failure #81: Down Goes Guaranty Items from The Economatrix: The Mother of all Bank Runs Unemployment: The Worst Hit States in July US Stocks Rise, Sending S&P to Highest Level in 10 Months Bank Failures in the US Even …

James: I have a question for you. Should a person keep old $20 gold coins, or convert them into 1 oz. gold American Eagles? This would assume coins with no great [numismatic] value, just old coins. Also, what about $5 and $10 gold pieces? Thanking You in Advance ,- Jim A. in Montana JWR Replies: As I’ve mentioned before, the often-mentioned threat of another gold confiscation is overblown, so essentially, “gold bullion is gold bullion.” For buyers here in the US, I recommend American Eagles from the US Mint, because they are widely recognized and accepted. There are also some …