Category: Economics & Investing

Economics and Investing:

New Hampshire Senator Judd Gregg: U.S. could be on path to a ‘banana republic’ situation. (Thanks to Tom B. for the link.) Reader MP sent this piece in Business Week: What happens if the dollar crashes? MP also sent this from The Motley Fool: The recession’s second wave, subtitled “Green shoots? Sure, but there is actually little evidence of a solid recovery” GG flagged this: FDIC bank fund in the red until 2012. Tom R. suggested this piece: Intractability of Financial Derivatives Items from The Economatrix: Weiss: Bernanke Gone Berserk! Bank Reserves Explode! “Martin here with the most shocking new …


Twenty-Two Reasons Why this Recession is Different and Why it Will Endure

I find it surprising that I’m now getting inquiries from readers, asking if “we’ve reached bottom” in the current economic recession, and asking if the time has come to start buying stocks or residential real estate. It seems that the talking heads of mainstream media are using some sort of voodoo. How can anyone think that we’ve hit bottom, and an economic recovery is in progress? To dispel the myths from the CNBC Cheering Section, please consider the following. (And note that I’ve provided references for each assertion, just so you know that I’m not talking out of my camouflage …


Economics and Investing:

Karen H. kindly sent us the following items: Bank of America Posts Third-Quarter Loss on Defaults. “The idea that the financial crisis is over is a fantasy and it looks like the numbers bear that out,” GE Profit Falls 45% as Revenue Trails Estimated Buyers Suing Trump in Miami Condo Glut as Values Return to 1989 “There’s no recession in the real estate litigation community,” Focus growing on keeping the jobless in their homes. A Perfect storm’s brewing to cool petroleum demand. Items from The Economatrix: Workers Still on Job, But Making Half as Much Delaying Foreclosure Can Lead to …


Economics and Investing:

Ex-Cop Loses Bank as Dutch Critic Spurs Withdrawals. (A tip of the hat to Karen H. for the link.) Jonathan H. flagged this: DOW 10,000!!!! Oh Wait, Make That 7,537. Jonathan’s comment: Due to reduced buying power, the current DJIA at 10,000 is equivalent to only 75% of when the DJIA went through 10,000 a decade ago. Additionally,back then $10,000 would have bought 30 ounces of gold; now its only 10 ounces. Items from The Economatrix: California Bank Becomes 99th Closure Financial Meltdown in the Decade of Greed Food Giants Cut Back on Size But Price Remains the Same Bankers …


Two Letters Re: Abandonment of the Dollar is a Premature Rumor

Dear Editor: This civil debate on the status of the Dollar–and thanks, by the by, for keeping things civil on your blog–all comes down to a matter of not “if”, but just “when.” The United States Dollar will soon be dead meat. Finis. See this article: Reckoning Day for US Dollar Coming Next Year. We just need to ask: will the[definitive] end [for the dollar’s dominant reserve status] come in six months, or six years? So, no matter when, I’m hedging by building up my stash of silver and lead. (The kind that goes “bang.”) Since I’m still paying off …


Economics and Investing:

Dollar hit on Fed’s signal of low rates. Meeting minutes show Fed has strong lean to more debt monetization. (Thanks to GG for the link.) Brian H. sent us a link to a piece in Zero Hedge. that quotes Money magazine: “Now 5 institutions hold 97% of the notional value [face amount] and 88% of the market value in derivatives, and they are all basically in the same business and all basically hedge with each other. It is not a true hedge when the other side can’t pay, and history has clearly proven how easy it is for the other …


Three Letters Re: Abandonment of the Dollar is a Premature Rumor

James Wesley, Regarding the oil-denominated-in-dollars flurry, two important points must be noted. First, dollar denominated contracts can be immediately hedged in foreign exchange markets (FOREX) even before the oil is pumped out of the ground. The oil barons aren’t stuck holding their dollars any longer than they can call a FOREX desk or sovereign Treasury department (3/4 of the world’s oil is owned by governments, not Exxon/Chevron/etc.) The more important point of dollar-denominated oil contracts is dollar prestige. Documents from the Federal Reserve show that Arthur Burns not only was interfering with the gold markets three decades ago, but the …


Economics and Investing:

Karen H. mentioned this sobering piece, also subsequently sent in by several other readers: Foreclosures: ‘Worst three months of all time’ The latest from Dr. Housing Bubble: A Comprehensive Look at the Southern California Housing Market: 60,000 Properties Listed on the MLS but over 100,000 in Shadow Inventory. California and Nationwide Median Home Price Trends since 1968. Say Good-Bye to Option ARMs. Also from Karen: Dollar to Hit 50 Yen, Cease as Reserve IRS Intensifies Global Hunt for Secret Offshore Bank Accounts Desperate Dollar Heading to the Basement. (BTW, they concur with my comments on the USDI‘s crucial support level: …


Two Letters Re: Abandonment of the Dollar is a Premature Rumor

In response to InyoKern’s letter: The title of this discussion thread and the original text that went with it could just as well have been written by any of the well-scripted talking heads on mainstream F-TV (financial television). My initial inclination is to be diplomatic, but considering the exceptional economic times we are currently witnessing, I say, “Balderdash!” I could reasonably conclude that the majority of the readers of “Survivalblog” are more apt to follow unconventional economic sages such as Jim Sinclair, Jim Willie, Jim Rogers, Bob Chapman, or Peter Schiff as opposed to the well-orchestrated financial propaganda of CNBC, …


Economics and Investing:

GG sent us this New York Post article: Dollar loses reserve status to yen & euro Fed’s Bullard warns on inflation, unemployment. (Thanks to GG for the link.) Value of UK farmland could double in five years. Jeff mentioned this piece at Zero Hedge: Why Did U.S. SDR Holdings Increase Five Fold in the Last Week of August? Items from The Economatrix: Weak Dollars, Strong Euro Combine to Create Eurozone Pain Rogers Sure Gold to Hit $2,000, Dollar to Lose Reserve Why Soaring Gold Prices Should Set Off Alarm Bells Unintended consequences of deflation: Colorado Minimum Wage to Drop as …


Letter Re: Abandonment of the Dollar is a Premature Rumor

Dear Jim and Family, I wanted to comment on the alleged threat of the Saudis to decouple the US Dollar from Oil sales. They’ve been saying that for a decade. The Iraqis promised to do it, one of the primary reasons for the invasion. The Iranians did it, but nobody cares because they’re an oil importing nation so they don’t actually matter much. The Venezuelans have been trying to get the rest of OPEC to do it since we nearly got Chavez ousted in a coup backed by the US. Pity that failed, but there will be a next time …


Economics and Investing:

Karen H. sent this: Dollar Facing ‘power shift Also from Karen: Stone Calls U.S. Economic Growth Outlook “Troublesome” in 2010 GG sent this: Silver Lining: Jim Rogers Talks Up Commodities Reader D.D. sent the link to a good piece by Bill Fleckenstein: Your dollars are just Monopoly money Items from The Economatrix: Gary North: The Fed’s Schizophrenic Monetary Economist Failed Financial Policies and Rising Unemployment in the US Stocks Bear Market Rally Will Soon Be Over Government Deficit Spending Killing the US Free Market


Economics and Investing:

Reader Brian S. sent this: Dutch DSB Bank Nationalized After Bank Run By Clients. “The Netherlands’ central bank said Monday it has taken control of DSB Bank NV after clients began a run amid fears the regional lender might collapse.” Brian notes: “People can [presently] only take 250 Euro per day from their accounts.” Icahn: Risk of Double Dip, Investor ‘Bloodbath’. (Thanks to Flavio for the linkio.) A piece by Charles Hugh Smith posted over at Housing Storm: Deflation or Inflation: Who Cares? Analysis from Greg Fielding (also at Housing Storm): Did the FHA make bad loans with taxpayer money …


What Recovery? Find Yourself a Recoveryless Job

For more than a month, the mainstream media has been yammering about an economic recovery. Chasing phantom “good number” statistics amidst an onslaught of otherwise bad economic and global credit market news, the Wall Street cheering section is desperately seeking some news that the current recession is coming to an end. They talk about “the recovery in progress”–almost a fait accompli. They have been so good at this that they have fooled some investors into putting their sidelined money back into the stock market. What a masterpiece of disingenuous grandstanding. But the sad truth is that there is no genuine …


Economics and Investing:

Mara spotted this: First Fannie and Freddie, Now the FHA? Mara’s comment: “Every time I read about more bailout money for existing “customers” or new bailout money for new “customers,” I start to get woozy and lightheaded! Good thing I am sitting down when I read this stuff!” GG flagged this New York Times piece: Failures of Small Banks Grow, Straining F.D.I.C. (100th US bank failure thusfar for 2009.) Items from The Economatrix: The Great Recession: The Numbers Tell The Story Investors to Companies: Show Us Higher Sales State Budgets Get Adrenaline Shot From Clunkers World’s Largest Shopping Mall is …