Category: Economics & Investing

Delay and Pray: Why the FDIC is Broke, by Dr. Gary North

“If it ain’t broke, don’t fix it.” — Burt Lance “If it is broke, don’t admit it before you absolutely must, and then blame it on events that no one could have foreseen.” — [Gary North’s] universal law of bureaucracy Burt Lance was briefly the head of the Office of Management and Budget under Jimmy Carter. He was a Good Old Boy from the banking world of Georgia. A William Safire piece, “Broken Lance,” created enough bad publicity to persuade Lance to retire in September 1977. The article won Safire a Pulitzer Price. Lance’s aphorism, taken from the South, has …


Economics and Investing:

From GG:The FDIC is in Trouble. (Only 2/10ths of one cent in reserves left available for each dollar of deposits.) Karen H. sent this: Recovery “not in sight” says BMW Also from GG: U.K. Royal Mint Doubles Gold Output as Demand Swells Greg C. found this one: Regulators close 3 banks in Florida, Oregon; total 72 “Bank failures have cascaded as the economy soured and loan losses soared, sapping billions of dollars out of the deposit insurance fund. It now stands at its lowest level since 1993, $13 billion as of the first quarter.” Also from Karen H.: Crude Oil …


Two Letters Re: Advice on Storing Precious Metals

Sir, Our prayers for you and your family continue daily. My grandfather has six 12″x12″ square wooden posts on his farm house’s front porch. Each one has held various caches for over 55 years and no one has ever been aware. It was not until 20 years ago that I was painting the posts and felt the need to replace a split board that he let me in on the secret. By the way, if a cache needed changing, it was usually done every few year as the posts were scraped, primed and painted along with the porch. For almost …



Economics and Investing:

Several readers sent this: About half of U.S. mortgages seen underwater by 2011 This was linked over at the Total Investor blog: China Warns Developed Nations of Inflation, Currency Threats Straycat sent this one: Hunger Hits Detroit Items from The Economatrix: Cash for Clunkers Gets $2 Billion Refill Job Losses Slow to 247,000; Jobless Rate Dips AIG Reports 2Q Profits, First Since 2007s Oil Rises Over $72 as Job Loss Slows Fannie Mae Loses $15 Billion, Seeks $10.7 Billion in Aid After 2Q Loss The Mother of All Bailouts (MOAB) will not stop growing for at least a decade! Mish …


Preparedness on a Very Tight Budget, by Shane M.

I see it several times a week: What gun should I get? How much ammo should I have? How big should my garden be? Should I get gold or silver? And on and on it goes, week after week. More and more people are becoming “aware,” and are seeking the advice of those of us who have “been there, done that.” There is so much great information out there to answer the plethora of those types of questions. Invariably, someone eventually asks, “how do I afford that?” There are other variations of this question as well, but it all boils …


Two Letters Re: Advice on Storing Precious Metals–Are Safe Deposit Boxes Safe?

Hello Jim, I think the problem with the links readers sent you about how and where to hide precious metals, cash, etc., miss the most important point–it’s not the hiding place itself, but how inaccessible or well-concealed the hiding place is. Given enough time, anyone who knows what kind of faux storage containers to look for (e.g., a can of soup) will naturally check there first. Unless items are stashed away in your bug-out location, burglars will typically want to get in and out of a house as quickly as possible.My recommendation would be to not only install a floor …


Economics and Investing:

Yikes! CBS Advertising Net Income Plunges 96% (Thanks to frequent content contributor F.G. for the link.) Tom G. mentioned this piece by Karl Denninger: Blatant Monetization Uncovered: Federal Reserve bought back half of the seven-year issue this week. I ‘ve warned you that monetization (and inflation) are coming. This is just the begriming! Reader Karl in PDX asks: Do you remember in the 1990 [gangster] film Goodfellas, by Martin Scorsese, when one of the robbery team goes out and buys a pink Cadillac for his wife with the proceeds? Robert DeNiro’s character has to step in. “Now, what did I …


Hard Times at Here–Are You Ready?

The hard economic times that I–and many others–warned you about are now here. We are clearly now in the opening stages of a full-scale depression that will last a decade or longer. This news article (sent to me by SurvivalBlog reader Eric C.) .about an unemployed couple in Indiana is a microcosm of what we will be witnessing for the next decade. Take a few minutes to read it. Our pampered society is in for a rude wakening. Now, at the risk of sounding unkind and judgmental, the term “white trash” comes to mind. Note that this man in Indiana …


Letter Re: Advice on Storing Precious Metals–Are Safe Deposit Boxes Safe?

Good Morning. I have been diversifying my investments, with a strong emphasis on gold and pre-1965 [silver] coins. Currently, the coins are stored in a bank safe deposit box. Can you tell me, in the event of a “bank holiday” will safe deposit boxes be available? In other words, I understand that they won’t allow me to withdraw cash from my account (my understanding of the term, bank holiday). But, would the bank allow customers access to the safe deposit boxes to withdraw whatever might be stored in the vault? Thanks for all you do. Keep up the good work. …


Economics and Investing:

Susan Z. recommended this piece by Bob Chapman: And All the Kings’ Horses and All the King’s Men… GG mentioned Mish Shedlock’s latest piece: Weekly Unemployment Claims Portend Disaster Also from GG: Federal tax revenues plummeting. I can foresee the reinstitution of pre-Kennedy-era marginal tax rates (more than 50%) in the next few years. This is just one more good reason to invest in tangibles. They’ll heavily tax interest income, but you don’t pay taxes on tangibles until you sell them. Several items from frequent content contributor Karen H.: Cathay Pacific to Park Six Passenger Planes After 27% Sales Slump …


Letter Re: Saving Clad Dimes and Quarters?

Sir, I have accumulated ‘some’ pre-1965 silver. Not the $1,000 face value per family member as seems to be the benchmark but I do have a bit over $1,400 face value and a few gold coins (about two ounces of gold, in combined weight) for my family. Someone told me that even post-1964 dimes and quarters (and of course pennies and nickels for their real metal value) would have ‘some’ value if the dollar went bust. I do not understand how this can be but I have been saving coins nonetheless. My question is am I better to take the …


Economics and Investing:

Most of you have noticed the recent price action in silver and gold. Typically, the precious metals go through “Summer Doldrums” each year, with light trading and moderated prices. But not this year! One can only ask: if the market this strong in August, then how will it be in November, as the US Dollar Index (USDI) continues to slide? I hope that you took my advice and bought silver when it was recently under $12.50 per ounce. In my estimation even at $14.50 per ounce, silver is still a bargain. As I’ve often written, buy on the dips. BusinessWeek …


Economics and Investing:

“John Smith” sent this: Bailout Banks Buying Treasuries Help Keep Rates Low. John’s comment: “This article illustrates how the Fed has cleverly ‘deputized’ banks to do its dirty work. Through a combination of very cheap funding (due to Fed policies) and lack of other attractive places to deploy money, banks have been encouraged to buy huge amounts of longer-term treasuries, effectively doing the Fed’s Quantitative Easing for it. So Quantitative Easing is alive and well, even if the Fed is just playing the role of central planner, not buyer in chief. That’s some slick sleight of hand by Chairman Ben. …


A Vault Full of Hedges: Tangibles, Tangibles, Tangibles!

My gun vault down in Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) is now full. It is a large vault (a Zanotti ZA-III modular six-footer) but it isn’t big enough. For more than 30 years, I’ve been accumulating barterable tangibles: guns, full capacity magazines, precious metals, optics, and knives. Each of these represents a fairly compact and liquid asset. They all have practical uses, although the coins and ingots are more of a medium of exchange rather than something intrinsically useful in and of themselves. (Oh, I suppose the silver could be melted down, cast into bullets, and put …