Category: Economics & Investing

Economics and Investing:

Jasper found this item from the McClatchy News Service for us: Regulatory reports show 5 biggest banks face huge losses. Here is a key quote: Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their “current” net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days. Hmmmm… “Derivatives.” Where have I heard that word before? DD sent …


Letter Re: Supply and Demand at American Gun Stores

James, We finally caught up on magazine sales in late February, filling our last outstanding back orders, and I actually have a limited number of C Products AR-15 magazines in stock and some Magpul PMags (which I really like). The manufacturers tend to send out a half of an order and then a few weeks later, the balance of it. They are clearly allocating inventory across their customer base and I would estimate that they are running two to three months behind. The delivery situation is getting worse, and my guess is that new orders placed today would likely arrive …


Letter Re: Some Observations at a Recent Gun Show

JWR, I attended a gun show in a Southern state this weekend and wanted to share my observations. I got there very early and was among the first ten in line. By the time we were allowed to enter, the line was out the door of the building and around the corner. I’d estimate around three hundred people in line. I left the show a mere hour later and the room probably had in excess of eight-hundred people and the line was still quite long. Ammo, of course, went fast. I was able to acquire all the ammo I desired, …


Economics and Investing:

Video clip from Australia: Jim Rogers calls is straight on the MOAB, economic recovery, switching to tangible assets, and buying productive farmland. Rogers: “Yes, we are going to have another depression in the United States.” Thanks to FloridaGuy for this: Pontiac, Michigan may lay off all school teachers GG sent a link to an Ambrose Evans-Pritchard video interview on the rush into gold over “high degree of fear” regarding hyperinflation and economic collapse From R.S.R.: Statistician Says US Joblessness Near Depression Highs (19.1%) Items from The Economatrix: Gunmakers and Retailers Post Strong Sales Increases World Stock Markets Fell Again (Monday) …


Letter Re: Advice on Cashing in US Savings Bonds

Jim, While we prepare to break ground for this years garden I’m still preparing my financial stores long before my harvest comes in. There is still one question I can’t find an answer for that satisfies me. Are U.S. Savings Bonds safe? We have allot of EEs that can be cashed in but if they are safe as Bonds why not leave them. But if every thing is headed down the tubes how likely is the U.S. Government to default on this paper just like it would on another paper currency? Southern-Survivor in North Alabama JWR Replies: As I’ve written …


Economics and Investing:

Bill N. sent this very observant piece: Gold, Spam, and Ruger vs the S&P 500.Bill notes “This is an interesting article, it even has a graph at the end comparing the S&P 500, gold, Hormel (makers of Spam), and Ruger Firearms for the last year.” Insurance giant AIG (now 80% US government owned, thanks to a $125 billion bailout with taxpayer funds) is not out of the woods yet. Asset values are continuing to decline, creating more credit default swap (CDS) derivatives counterparty risk. $300 billion in assets have already been affected. For some details, see this Wall Street Journal …


Economics and Investing:

SurvivalBlog’s Editor at Large Michael Z. Williamson sent us a link to an interactive unemployment map. OBTW, speaking of Mike, I just heard that his recent sci-fi novel “Better to Beg Forgiveness…” is now out in paperback! (Be forewarned that this is not a children’s book!) D.S. flagged this from US News & World Reports: How to Handle Your Job and Finances If There’s a (Yikes!) Depression Signs of the times, courtesy of FloridaGuy: Stark, Ohio’s hottest job: Janitor – Over 700 applications for one slot. Holding a layoff-proof, low-paying civil servant job may become the source of envy, as …


Economics and Investing:

Do you recall the warnings that I’ve made, starting in 2006, about derivatives counterparty risk? Well, CDS paper is just one aspect: Pressure to reveal major AIG counterparties grows.Stay tuned, as the economic depression unfolds, and we see hundreds of counterparties cease to exist. Who will get caught holding the bag? I spotted this linked at Drudge: 12 percent are behind on mortgage or in foreclosure. “A stunning 48 percent of the nation’s homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure…” From reader Mike K.: We Are Facing an ‘Inflation Holocaust’: Jim Rogers. …


Letter Re: The Impact of FDIC Insurance Rate Increases on Small Banks

Mr. Rawles, We live in mostly rural northeastern Oklahoma. Our local newspaper just printed an informative editorial about FDIC changes which result in huge fee increases for member bank. Here is an excerpt from the editorial Oklahoma banks paying price for bailouts: “Imagine paying $500 per year for your car insurance and then being told it had gone up to $4,000 even though you have been a perfect driver with no accidents, no moving violations. That’s the magnitude of premium increases local bankers are facing. The local banks I spoke to had no part in the sub-prime loan implosion and …


Economics and Investing:

HPD flagged a sobering article from The Market Ticker: What’s Dead (Short Answer: All Of It) It is amazing seeing something like this coming from a relatively mainstream blogger like Karl Denninger: “Civil unrest will break out before the end of the year. The [active component] Military and [National] Guard will be called up to try to stop it. They won’t be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to …


Economics and Investing:

We’ll start with some relatively good news: Oil producers running out of storage space: Glut caused by world slowdown leaves the world awash in crude. (A hat tip to Charley S.) Sean M. sent us a link to some charts sum up how bad things are getting, very succinctly: DD sent this: As markets slump, U.S. tries to halt cycle of fear. (They may say that we have “nothing to fear but fear itself”, but I don’t think it is irrational to fear tens of thousands of unemployed and hungry people that have been kicked out of their foreclosed houses. …


Letter Re: Voting With Your Feet–Comparing Economic Freedom in the 50 States

Mr. Rawles, A study was conducted by William P. Ruger and Jason Sorens of the Mercatus Center at George Mason University on a ranking of states basis on personal and economic freedoms. It is titled: Freedom in the 50 States: Index of Personal and Economic Freedom. It encompasses items such as income tax, gun laws and homeschooling (among many other areas). My state unfortunately ranks in the bottom thirteen. As my family and I search for another income means it may behoove us to “vote with our feet”, as you say. Here is an abstract of the study: Abstract This …


Economics and Investing:

Vicki sent us a bit of video mirth to cheer us up, since there is more bad economic news to come: Taxpayers Clearinghouse Prize Patrol – Yes We Can! Thanks to OSOM for this: Marc Faber goes survivalist (as quoted in Bloomberg). “The best bet for investors may be to buy a farm and escape from the cities, as a prolonged recession could lead to war, as the Great Depression did.” From Bill in Ohio: The D-word: Will recession become something worse? From reader HPD: Bernanke Says U.S. May Need to Expand Bank Rescue. (Yea, the girth of the great …


The Long Arm of the Lawless, by Fred Burton and Scott Stewart

Last week [in a STRATFOR briefing] we discussed the impact that crime, and specifically kidnapping, has been having on Mexican citizens and foreigners visiting or living in Mexico. We pointed out that there is almost no area of Mexico immune from the crime and violence. As if on cue, on the night of Feb. 21 a group of heavily armed men threw two grenades at a police building in Zihuatanejo, Guerrero state, wounding at least five people. Zihuatanejo is a normally quiet beach resort just north of Acapulco; the attack has caused the town’s entire police force to go on …


Economics and Investing:

Tony W. sent this: Even ‘Dr. Doom’ Is Scared: Economy Much Worse Than Roubini Predicted Bill from Ohio spotted this: 5000 Dow? 500 S&P? From Kevin A. come this sign of the times: Manhattan Apartment Buyers Abandoning Six-Figure Deposits Rather than Closing on Deals. Reader Kris N. mentioned in a recent e-mail: Over the last few weeks I have heard several politicians say that credit markets need to be opened up so Americans can start spending more to improve the economy. Is this not like Marie Antoinette proposing the solution to the peasant’s bread shortage is to have them switch …