Category: Economics & Investing

Economics and Investing:

A couple of years ago, I created the acronym MOAB (for “Mother of All Bailouts”). I predicted that once started, it would “continue to grow uncontrollably”, but even in my worst nightmares, I didn’t fully anticipate this headline: Financial Rescue Approaches GDP as U.S. Pledges $12.8 Trillion. I have trouble imagining the enormity of one Trillion US Dollars. That is quite a pile of money. But $12.8 Trillion? To borrow a line from Bart Simpson: ¡Ay carumba! JHB forwarded a link to this government psychology site: A Guide to Getting Through Tough Economic Times. But I have a much better …


Economics and Investing:

Reader D.D. spotted this: A [GM} Bond Bustin’ Worry From Michael W.: Why gold prices will keep rising – MSN Money Also from Michael W.: What’s a P/E? (And nine other ‘dumb’ questions) Michael’s comment: “The author of this article is too funny, especially when he talks about gold and survivalists. He just does not get it” Items from The Economatrix: Wall Street Begins 2Q Slightly Higher GOP’s Alternative Budget Seeks to Undo Stimulus Spending G-20 Protesters Break Into Royal Bank of Scotland US, UK Fiscal Deficits Cast Long Shadow Over Recovery US Property Prices Down 29% and Still Dropping …


Economics and Investing:

Soros: The Recession Will Last Forever. Thanks to Kevin A. KAF sent this: Dinah Lord: The next financial shoe to drop? Pension Benefit Guaranty Corporation Economist Tim Lee: Gold: ‘How I am hedging my portfolio against hyperinflation’ (a hat tip to G.G. for the link.) Items from The Economatrix: Wall Street Rebounds on Last Day of Quarter GM, Chrysler Failing to Recover AIG Crisis Tip of Insurance Iceberg? Obama’s Remarks on US Car Industry Auto Producing State Politicians Stunned By Obama “Tough Love“ Oil Tumbles Below $50 First Time in a Week Morgan Stanley Suggests Major Stock Sale Federal Pension …


Letter Re: Should We Still be Saving Nickels?

Dear James, Do you still recommend saving nickels [as you suggested in SurvivalBlog, in 2007]? Thanks for all you do. I’m planning on ordering the new edition of your novel on April 8th, and I’m currently re-reading the original [edition]. May God continue to bless you and your family. Sincerely, – Steve B. JWR Replies: Yes, nickels (American five cent pieces) are still “the pauper’s silver”. Since base metals prices pulled back in advance of current the recession and have remained low, it looks like we may have another one or two years available to amass nickels. (For now, they …


Economics and Investing:

From BNL: ‘Atlas Shrugged’: From Fiction to Fact in 52 Years SF mentioned this: NYSE Runs Out of Gold Bars: What Happens Next? K.A.F. mentioned a photo essay from Time magazine: The Dangers of Printing Money Items from The Economatrix: Stocks Tumble as Automaker’s Plans are Rejected G20 Targets Hedge Funds as Leaders Near Consensus [British] Banking and Finance Sector to Axe 30,000 Jobs in Six Months Fresh Flight From Risk Hit Global Equities London Shares Slide as Global Bull Run Fades GM CEO Resigns at Obama’s Behest Hedge Funds Vow to Fight as G20 Gathers Germans Wreck Global “New …


Economics and Investing:

I got another one of those “when are stock and real estate prices going to bottom?” question e-mails, this time from reader G.R.P.. He was anxious that both the value of his house (in coastal southern California!) and his 401(k) have both already lost about half their value. The plain truth is that we are nowhere near the bottom. The economy won’t turn around until a lot of malinvestment and toxic debt gets worked out of the system. And markets won’t re-liquidify until after asset values get close to a bottom. For now, prices are still marked to mystery rather …


Letter Re: Paying Off Debts with Inflated Dollars?

JWR, I understand when you say that hyperinflation will make the price of things go up and up, like a ten dollar or hundred dollar loaf of bread. But what happens to a financed item, specifically the home [that is] mortgaged? Can the lender change the interest rate or the length of loan? What about other financed items like a car loan? If nothing changes then a person would be paying back the loan with inflated dollars, which might be a good thing? Please explain. Thank You, – RenoFlyBoy JWR Replies: To begin: You had asked: ” Can the lender …


Economics and Investing:

Alyce at The Motley Fool Goes Doomer: The Four Things You Need. (Thanks to Lynne W. for the link.) Items from The Economatrix: Credit Union Collapse Signals Depth of Financial Crisis On Wall Street, Talk of Trust and Civil War Marc Faber: It Will All End in Disaster Economic Dirty Bo Goes Off in NY In NY, a Second, Silent 9-1-1 Accidents Can Happen (The Mogambo Guru) The End Game Approaches Ron Paul: Bankruptcy is Economic Stimulus  


Economics and Investing:

Gerald Celente Predicts Economic Armageddon by 2012. (A hat tip to Reader P.D. for the link.) OBTW, take it as a warning sign if you hear that Gerald Celente has moved from New York to say… Wyoming. From D.V.: Goldman Sachs’s Cohen Predicts More Bad News on Banks Items from The Economatrix: Our New National Currency: The US Fuffle IBM to Cut 5,000 US-based Jobs, Shift Work to Emerging Markets Wall Street Turns Cautious But Logs Third Weekly Advance Failed Bank: Omni National Bank, Atlanta Georgia Lendman: Obama’s Latest “No Banker Left Behind” Scheme “Nobody can be confident that the …


Economics and Investing:

HPD sent this: Geithner plan will rob American taxpayers: Stiglitz Kevin A. recommended a piece by Bill Fleckenstein over at The Silver Bear Café: Got gold? You’re right on the money. Here is a quote: “We are attempting to print our way to prosperity. That can’t be done, any more than we could speculate our way to prosperity during the stock bubble or borrow our way to prosperity in the real-estate/credit bubble.” Jeff K. suggested: Bernanke Inserts Gun in Mouth. Jeff’s comment: “We disagree on inflation versus deflation [in the next few years], but one must take notice when a …


Economics and Investing:

From Joan M.: Sen. Gregg Criticizes ‘Banana Republic’ Budget Proposal A quote: “The ranking Republican on the Senate Budget Committee warned on Monday that President Obama’s budget proposal will lead to unsustainable debt levels and send the country on a fiscal path resembling that of a ‘banana republic….called the deficit estimates attached to the budget plan “staggering,” and he warned that such deficits would trigger a national debt that amounts to “running your country into the ground.’” MVR sent this interesting perspective on the US Dollar and debt from Thailand: The real US financial crisis has yet to begin G.G. …


Economics and Investing:

Lisa forwarded us the link to the PDF of a new think tank report: Manning the barricades: Who’s at risk as deepening economic distress foments social unrest SurvivalMama sent a great Schumeresque snippet from Brad DeLong’s Grasping Reality With Both Hands blog: Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn’t make back its money? A: Then we have worse things to worry about than government losses on TARP-program money–for we are then in a world in which the only things that have value are bottled water, sewing …


Economics and Investing:

Do you remember how back in 2007 I described commercial real estate as “the other shoe to drop..”? Matt B. sent this article on how it is indeed collapsing. “Elfin” spotted this: Fed Planning Inflationary Dollar Destroying 15-Fold Increase in US Monetary Base – and then things really go bad! G.G. alerted us to the new video and and audio clips of Peter Schiff speaking at the 2009 Austrian Scholar’s Conference: “Why the Meltdown Should Have Surprised No One”. G.G. notes: “This is very entertaining. Listen closely to last 15 or so minutes for Schiff’s description of what he sees …


Economics and Investing:

I spotted this linked at Drudge: White House Agenda on Track Despite Worsening Deficits. ($9.3 trillion in deficits projected!) Just as I warned, the Mother of All Bailouts (MOAB) is becoming uncontrollably self-perpetuating. (“If Industry X is deemed worthy, then why not Industries Y and Z?” Down and down we’ll go–down the road to ruin.) From reader HPD: GM, Chrysler May Need Additional Aid, Rattner Says MVR flagged this commentary from the National Post‘s Terence Corcoran: Is this the end of America? “N” mention a piece by Simit Patel, over at the Seeking Alpha blog: Fed Intervention, Market Response Confirm: …


Letter Re: Ammunition Shortages in U.S. Might Become Chronic

Hi Jim, A man with the Customer Service department at Midway explained that backorders are expected to continue and there appears to be no reduction in demand. Browsing their web site, I see ‘expected’ delivery dates pushing further into the future, and up to six weeks delay for the less expensive and common caliber hunting bullet, mostly .30 caliber bullets. Many premium bullets are also on ‘back order’ since my last visit. And now, even less common caliber bullets are backordered as well as other reloading components and reloading tools. The shortage at Cabela’s also continues. The Civilian Marksman Program …