Category: Economics & Investing

Yishai was the first of several readers to mention this “must read” piece: US speeding towards financial crash   Jimmy G. sent this: Stocks still face deflationary collapse: Prechter. I agree that there will be deflation, but only in the short term. I still see Uncle Sugar’s only viable option is inflating their way out of this mess. This leads me to coin a new motto: Never underestimate the ability of governments to print money. Items from The Economatrix: Six Insurers to Get Billions in Bailout Money (JWR Notes: The MOAB won’t stop growing!) GM to Close 1,100 Dealerships Consumer …

James, My experience with [US Mint] Silver Eagles is similar to your description [of their lack of widespread recognizability]. I traded 1 silver eagle for some merchandise at $20 USD per Eagle. The person was happy. I explained to them that this was 1 oz. of silver and at the time of the trade it was equal to the amount that I told them. A few days later I went back seeking to trade again and they told me that since the face value [marked] on the coin was $1 USD that it was all the value they would exchange …

Dimitri Orlov on The New Money (A hat tip to Ruby and Vlad’s Mom) The truth escapes the lips of BHO: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ I’m praying that he does the right thing, but given the composition of Big Government/Big Taxes/Big Deficits policy wonks that were picked for his Cabinet, I have my doubts. Thanks to B.H. for this video link: “The Worst Is Yet to Come”: If You’re Not Petrified, You’re Not Paying Attention GG sent us this: China’s yuan ‘set to usurp US dollar’ as world’s reserve currency Items from The Economatrix: Even BoE Has …

Dear Sir, Regarding comments made in the letter on which form of precious metals to buy, readers should be aware that numerous Chinese fake silver dollar coins exist in today’s market. I recently became aware of these by an honest seller who identified the fakes as such, and sold me a couple for comparison purposes. They are available as common Morgan and Peace dollars as well as more numismatically valuable styles such as draped bust and trade dollars. They look surprisingly realistic and appear to have normal aging and wear consistent with what you would expect. Believe me when I …

Just as I envisioned three years ago, derivatives are now in thes spotlight: Treasury Seeks More Financial Regulations in Shadowy Markets. (Thanks to Danny S. and KAF, for the link.) From the Appenzell Daily Bell: Beginning of the end? Fed cannot account for $9 trillion KAF sent us this: David Frum: Quick fix today, crisis tomorrow in Obama’s White House Redaer GG flagged this: Strong appetite for silver boosts coin production “Mints around the world almost doubled their silver coin production in the first quarter in response to a surge of investor interest in the metal.” Items from The Economatrix: …

Dear Sir, During a discussion with a friend today, we chatted about which format of silver would be most viable as a form of a tangible asset. We discussed the recognized value of Silver American Eagle coins versus”silver rounds”, and found ourselves asking more questions than being able to provide reasonable answers. The conversation was based on my recent decision to convert US currency into silver rounds at a price of $0.90 over spot price (at the time $11.91 per ounce). This was a much lower price than the $3.59 over spot price for Silver American Eagles, so it seemed …

Greg C. mentioned some commentary by Howard Rich: The United Fiefdoms of America. “For the first time ever, federal aid – not property, sales or income tax – is the top revenue source for state budgets, the paper reported.” GG flagged this by Karl Denninger: Nothing Suggests We’re Anywhere Near the Bottom CJB suggested this article: Social security to run out of money… And, in a disturbing echo, GG suggested this: Medicare already in the red Items from The Economatrix: Social Security and Medicare Worsens (since yesterday’s article) “The trust funds — which exist in paper form in a filing …

White House forecasts higher budget deficit: ” …a $1.75 trillion deficit, or 12.3 percent of GDP.” Skip sent me this: Is America About to Go Broke? WSJ Video: Dow 4,000 Still in the Cards (Thanks to Chris for the link.) From Greg: Commodities – Shortages stir coffee and sugar prices From Tom S.: Where are Argentina’s coins? Items from The Economatrix: US Red Ink Rises Even Higher, $1.8 Trillion The Federal government will have to borrow nearly 50 cents for every dollar it spends Chinese Deflation Picks Up Speed Local UK Governments Lose 2.5 Billion Income Enjoy The “Rally”…Sucker Punch …

Now, the truth comes out: Banks Won Concessions on Tests. I figured the “tests” were rigged, but not quite so blatantly. And here are some more details on the “Buddy-Buddy” Creative Accounting: Fed cut banks’ deficits after negotiations: report. (Thanks to Roger Y. for the links.) Reader D.D. sent his one: Next challenge for banks: Credit card losses Number usually tracks unemployment, but this time it may be worse Items from The Economatrix: Global Financial & Economic Crisis: How Much Time Do We Have Left? “The US-Dollar has been technically hyper inflated, even though no one is saying “the king …

From Eric S.: 24,700,000 Unemployed or Underemployed Americans: Job Losses Accelerate with 6 million unemployed over last year. Real Unemployment rate now at 15.8 Percent. Also from Eric: FDIC Insures $4.7 Trillion in Deposits with a $13.6 Billion Deposit Insurance Fund. This is Like Going into a Hurricane with a 99 Cent Store Umbrella. Items from The Economatrix: UK House Prices Continue To Plummet 401(k)s Hit By Withdrawal Freezes Global Crisis “Vastly Worse” Than 1930’s, Taleb Says “The global economy is facing “big deflation,” though the risks of inflation are also increasing as governments print more money, Taleb told the …

Swine Flu: Worst to Come in Autumn “Doctors are being warned to prepare for a second, “much worse” wave of swine flu hitting Britain in the autumn, the Health Secretary has disclosed.” Tamiflu Linked to Abnormal Behavior KAF sent this: Economic crisis in European Union Items from The Economatrix: Real Unemployment 15.8%; Highest Since ADA Began Tracking The Greatest Boondoggle in History Skousen: Bailouts & Bankruptcy: Undoing The Rule of Law GM Spots Bankruptcy In Rearview Mirror as it Burns Tankfuls of Gas Toyota First Annual Loss Stress Tests Show 10 Biggest Banks Need to Raise $75 Billion China Fears …

Warren M. wrote to mention that in their 2010 planning document, the US Mint is now considering a new, less expensive composition for the US Nickel. (The five-cent piece.) The Mint document states: “…the unit costs to manufacture the one-cent coin (penny) and 5-cent coin (nickel) are more than their face value for the third consecutive fiscal year. Changing the composition of all circulating coins to less expensive materials would ultimately result in significant taxpayer savings without compromising the utility of these coins. Accordingly, the United States Mint plans to work with the Department of the Treasury and the Congress …

Reader HPD pointed us to this commentary by Mish Shedlock: Preliminary Stress Test Results. What a sham! HPD also mentioned this: Futures Fall, BofA May Need $35 Billion in Capital. HP had these incisive comments: “Expect BofA (and Wells Fargo) stock to bounce after the initial decline. Geithner has taught the market that he will throw a lifeline to any large bank, no matter how insolvent. Thus is capital misallocated in a centrally planned economy.” He added in a later e-mail: “Outrageous! But did we really expect anything different? …Gee, I wonder why all the major servicers are sitting on …

Roddy sent this from the Guatemala Times: The Great Depression Analogy R.S. forwarded this from The Financial Times: If China loses faith the dollar will collapse A recent column by Libertarian commentator Vin Suprynowicz: Light at the end of the tunnel: They only need another $20 trillion DS liked this piece by Karl Denninger, over at Seeking Alpha: Independent Analyst Numbers Far Uglier than Official Stress Test Rumors. JWR’s comment If we take into account that most US residential real estate will likely fall another 30%, and most commercial property by another 50%, then the “official” stress test results will …