Category: Economics & Investing

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 …


Economics and Investing:

JWR’s Introductory Comment: Gee, in light of all the following very bad economic news, can someone please send me something cheery to post? Perhaps some more articles about gun makers making record profits and building huge order backlogs? Frequent contributor HPD sent this: Brown told us not to question banks on risky practices, says City watchdog Reader “Bigbird” mentioned a piece in The Australian by Niall Ferguson with some biting criticism of Keynesian economics: The Great Repression CJB flagged this news story on the Chinese economy: China warns of unemployment risk GG sent us this one from Smart Money: Nothing …


Letter Re: US Dollar Slide Versus Iraqi Dinars

Mr. Rawles, I just wanted to drop you a line and tell you I enjoy your blog daily and have read it almost from the start. I am currently in Iraq a little North of Joint Base Balad. On the local economy the Iraqi Dinar is 1000 dinars to 1 American dollar. However, the past few months if you want to pay with American dollars in the local economy, they are discounting it by 66%. What 1000 dinars buys, 1 dollar used to buy. Now it cost 3 dollars. At the local Iraqi police academy there is a stall that …


Letter Re: Deep Apprehension About Dangers in the Near Future

Mr. Rawles: I, as well as possibly tens of thousands of my fellow Americans, are extremely fearful that the United States Government is slowly becoming like the former Soviet Union and that the day will come when the citizenry is in serious trouble. I continue to prepare as best I can for my family in the event it all comes crashing down but I cannot see where I will prevail long against American soldiers, police, and gangs that might try to harm me and my family. I am further afraid because I do not know Jesus Christ as my Savior …


Economics and Investing:

Reader HPD recommended this: Why the U.S. Government Should be Cut Off Like a Subprime Borrower HPD also sent this bit of news, which comes as no great surprise: AIG Breakup Likely. Al H. said that he liked this Business Week interview: Jim Rogers Doesn’t Mince Words About the Crisis Items from The Economatrix: Fear of Global Depression Up as US Reveals True Extent of Decline Fresh Evidence Points to Paralysis of Global Economy 750,000 jobs were lost in US in February, worse to come Iran Threatened with Economic Meltdown Buffett: Economy Will Be in Shambles in 2009 Wall Street …