Category: Economics & Investing

Laura H. suggested this Wall Street Journal piece: From Bubble to Depression?, by Steven Gjerstad and Vernon L. Smith Kevin A. sent us this: Geithner’s Stress Test “A Complete Sham,” Former Federal Bank Regulator Says Items from The Economatrix: West Must Deal with $600 Trillion in Derivatives Bernanke’s Financial Rescue Plan: The Growing Prospect of a US Default. Here are two keyquotes: “It is impossible to know what the long-term effects of Bernanke’s excessive spending will be, but his plan has the potential to trigger hyperinflation or spark a run on the dollar.”, and: “The recent 22 percent uptick in …

G20 Summit Recovery Package: A Global Plan of Unprecedented Scale Derivatives will have to go through a central clearinghouse. Concern Grows Over New IMF Power G20: Fat Cats Brought Down to Earth with a Bump ” …the declaration shows how little political influence is now wielded by the once powerful vested interests of Wall Street and the City of London.” President of European Commission Warns Millions More Europeans Will Lose Jobs G20 Laid Foundation for Next, Bigger Crisis Banks Could Bet on Toxic Assets with Taxpayers’ Money “Making Work Pay” Won’t Change Many Spending Habits (Most won’t notice a $10 …

Laura H. suggested this WND article: Families learning of $163,000 tax ‘bomb’, Economics prof says deficits heading toward ‘banana republic levels’ From reader AC: Social Security Surplus Already Gone Reader Jon M. flagged this, over at Seeking Alpha: Did the ECB Save COMEX from Gold Default? Items from The Economatrix: Congress, Bankers Just Don’t Get It “Changing the way you account for losses on bad assets doesn’t mean the losses have gone away. If anything, the obfuscation of those losses will drive investors away because balance sheets in the financial sector will become more opaque.” What to Buy Before the …

Courtesy of reader D.D.: Faint signs the economy has a pulse? Better-than-expected factory orders, but job market still a worry. From G.G.: U.K. News: Interest Rates Set to Soar, Warns Bank’s Chief Economist M.A.M. suggested a piece that was linked at the Naked Capitalism blog: On the Urgency of Restructuring Bank and Mortgage Debt, and of Abandoning Toxic Asset Purchases. (Hussman’s approach is a bit interventionist for my taste, but at least it underscores the broad implications of the current crisis.) In my view, malinvestment must be worked out the system naturally, through bankruptcies. The fractional reserve credit system and …

Now this is downright sinful: Woman Cashes in Rare U.S. Double Eagle $20 Gold Coins for Face Value. I’m glad to see that the bank teller was fired. Parenthetically, it has now been 76 year since gold coins were taken out of public circulation in the US. At the time, the difference between he value of a $20 bill and a $20 gold piece was small. But today, the enormity of FDR‘s grand larceny scheme is apparent. Perhaps that is the greater sin that should have been highlighted in this news article. (Thanks, BTW, to Josh for the link.) D.D. …

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 …

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 …

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 …

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 …

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 …

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 …

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  

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 …

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 …