depression

Asiatic Adventuring, Part II

To follow up on the conversation we began the other day… Mr. Obama needs a short, victorious war before the election, but those are thin on the ground unless your name was Moshe Dyan or Golda Meir. Looking at the quotes I have to work with today, I think Barack’s found his war. Unfortunately, the Chinese are going to win it and the figures will come cascading down rapidly, perhaps in time to stampede whatever portion of the electorate isn’t already on the prod. China isn’t taking kindly to making its products less competitive by adding large tariffs (any more than it does to demands that it revalue its currency), and the very rapid reply to Mr. Obama’s U.N. meeting and the new house bill was to strike swiftly at major US manufacturers. We have to admire their style, none of that tough talk stuff, a simple, polite, “the Chinese government announced Sunday ( Ed. Note: a week ago) that it is launching a probe into (the) possibility of the U.S. dumping auto parts and chickens on the Chinese market.” Those in the know had no difficulty reading that as “We have Tyson Foods, Pilgrim, Goodyear, and Cooper Tire & Rubber in our crosshairs, and that’s just for starters.” Somewhere here I had a dignified retort that adjusting the exchange rate by 20% would drive many Chinese firms out of business, which certainly makes sense on the margins they’re working on. The Smoot-Hawley Tariff Act of 1930 raised import duties to record highs and was a large contributing factor in the length and depth of the Great Depression. Protectionism never works out the way proponents think it will. There are those saying “there, there, now.” “Michael Strauss, chief economist with Commonfund, a money management firm based in Wilton, Conn. said there is not going to be a repeat of the mistakes of Smoot-Hawley. Strauss said both the U.S. and Chinese are smart enough students of economic history to know that the last thing the world needs now is for arguably the two most important economic powers to turn a spat over tires and chickens into something that could derail a global rebound. ‘This is not that big of a deal. You get these battles once in a while and they pass. This is not reminiscent of what happened 80 years ago. Deep down, the U.S. and China know that they need one another. There’s going to be more negotiation than retaliation.’” Right. Now, about the chicken parts and the auto parts… CNN caroled cheerfully, “But at least one economist thinks cooler heads will eventually prevail and that the brouhaha over tires won’t lead to the China and U.S. levying more tariffs on other goods.” Kurt Karl, the Chief U.S. economist with Swiss Re weighed in with this opinion: “One would hope we can avoid more of this. There is no positive side to raising tariffs.” “Mr. Karl isn’t too concerned that China would dump Treasurys. He argues that would be the equivalent of China shooting itself in the foot since it would further erode the value of its holdings. Nonetheless, Karl does worry that China could retaliate against the tire tariff with tariffs of its own and even more government subsidies of Chinese manufacturers. That could make the trade deficit worse. And that’s especially …

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The Nixon Shock

The Nixon Shock

Have you looked at the market lately? The Dow is pushing 11,000. The S&P 500 has broken out above 1,150 and seems to be going to 1,220. Gold is at $1,346 per ounce, another all-time high. Silver is at prices not seen since the Hunt brothers tried to corner the market back in the 1970s. Oil is threatening to break out of its range… Aluminum, copper, tin, Molybdenum , nickel — all up! The price of cobalt has jumped from $24 to $40 per pound in the last three months. When pigs fly, pork bellies The prices of wheat, coffee, and pork bellies are going parabolic… “What’s going on?” you might ask. Could it be that investors are suddenly jazzed about tin, or think that hot dog sales will boom this Thanksgiving? No, of course not. The answer lies with our own happy Federal Reserve. Brian Sack, a senior official at the New York Fed, said this about quantitative easing in a recent speech: “Balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth bykeeping asset prices higher than they otherwise would be.” Ponzi scheme In other words, the Fed is trying to prop up housing prices and the stock market (i.e. 401ks and other retirement plans) by keeping rates low, printing money, and destroying the value of the dollar. The fact that they admit this isn’t surprising… (It should be. I wish I was shocked, but I’m not.) The U.S. economy has been run like a giant Ponzi scheme since the Asian Currency Contagion of 1998. This was followed by a series of “crisis that will destroy the world economy”: Russian debt default, 9/11, Long Term Capital Management, dot-com bubble, housing collapse… Each one of these crises required the heroes at the Fed to step in and “save us” by printing money and creating the next bubble. This always reminds me of those Salvador Dali posters all the cool kids had in college: At some point, you have to pay the piper. Bills come due, and you can no longer prop up the empty corpse of the economy by adding another buttress. The flaming giraffe of debt will have his say. We wish, dear reader, that someone had the nerve to stand up in 1998 and let those who bet on LTCM take their lumps as a warning to the rest of the capitalist risk-takers. Make no mistake; the bailout of LTCM twelve years ago is directly responsible for the debt markets turning into a free-for-all five years ago. Heck, many of the same people were involved. And why not take risks? If the Fed can bail out Long Term Capital Management, they can bail out AIG. And Wall Street was correct in its assumption. Nothing has changed… No lesson has been learned. The currency war Right …

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Physical Metals Run on LBMA in Play NOW. COMEX Next? | Wall Street …

Filed in Australian Gold, Bank Gold, comex, depression, Gold by on October 3, 2010 1 Comment

Adrian Douglas of GATA reports: It appears that a run on the bullion banks has commenced. There is a cover-up of back-door injections of liquidity of physical gold , and the LBMA now is trying to conceal trading information. …. if there is a run on bullion on the stock market or metals exchange it WOULD BE DAMN SAFE TO ASSUME the markets will tank like they did in the great depression . omg this is golden info THANKS COMEX and TSX is next god bless. zalida100 …

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Thriving with Gold and Juniors in the Greater Depression

The Gold Report: Doug, at a recent conference you said that the U.S. ought to default on its national debt now. Why that rather than letting it play out? Doug Casey: Several other things almost equally radical should be done besides defaulting on the debt. I recognize that an outright default is most unlikely, but the national debt should be defaulted on for several reasons. To start with, once the U.S. government defaults on its debt, people will think twice before lending it any more money; giving politicians the ability to borrow is like giving a teenager a bottle of whisky and the keys to a Corvette. A second reason is that the debt is an albatross around the necks of the next several generations; it’s criminal to make indentured servants out of people who aren’t even born yet. A third reason would be to overtly punish those who have been lending money to the government, enabling it to do all the stupid and destructive things that the government does with that money. The debt will be defaulted on one way or another. The trouble is they’re almost certainly going to default on it through inflation, by destroying the currency, which is much worse than defaulting on it overtly. That’s because inflation will wipe out the relatively few people who are prudent in this country, those who are actually saving money. Because they generally save in the form of dollars, they’re going to wipe them out financially. It’s just horrible. Runaway inflation will reward the profligates who are in debt—people who’ve been living above their means. And punish the producers who’ve been saving and trying to build capital. That’s in addition to the fact it will destroy millions of productive enterprises. A runaway inflation is the worst thing that can happen to a society, short of a major war. They just should default on it honestly, as it were. TGR: But your belief is we’ll try to inflate our way out of it to pay for it. DC: Don’t say “we.” Say the U.S. government. I don’t consider myself part of the problem. Americans have to…

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The Ten Things You Should Be Doing NOW and Everyday

Filed in deflation, depression, Spot Gold by on September 24, 2010 0 Comments

“Must Do” #1: Stay Alert and in the Know. For the last fourteen weeks, we’ve examined the new economic realities that confront us on a daily basis. Our discussions have centered on a groundbreaking documentary, “The Fall of America and the Western World” which let us in on the thoughts, principles and policies of right wing, left wing, centrist and independent economic and political thinkers. Each week we’ve offered practical advice on things you can do to prepare for further economic deterioration and ultimately, your survival. This marks the last of our articles — we thought it would be advantageous to summarize our previous tips on what you should be doing starting right now and going forward to best position yourself to keep your head above water… TIP ONE: Get Real. You must realize you are being lied to by the media, the politicians and the experts. If you don’t accept this reality, then you will not be serious in your efforts to change your situation. TIP TWO: Be Prepared. Figure out what you’ll need to survive and examine what you have. This will tell you what you don’t have. Start a plan so you can get what you need, but don’t yet have. TIP THREE: Become Self-Sufficient. The more dependent you are on others, the less likely your chances of survival. Start with the basics: food and water. Do you have a plan for feeding yourself if the food supply chain breaks down, supermarkets go out of business and your cupboards are bare? TIP FOUR: Be Secure. As things get worse, those that have will become targets of those who have not. Is your home secure? Are you hiding your “wealth” and looking poor? Are your assets easy to get to but securely protected? TIP FIVE: Get Off the Grid. As resources dwindle a steady, reliable source of power will become a necessity. Solar, wind and hydropower are all within the reach of the individual, depending on your location. Transportation needs also must be considered, especially if you are reliant on public transit. Do you have a bicycle? TIP SIX: Get Out of the Dollar. You will need an emergency fund. Dollars are not the currency you want this fund in. Think precious metals and buying a safe to store them in as your bank may not be around much longer. TIP SEVEN: Think Individually, Act Privately. Be brutally honest about your skills. If your skill set will enable you to do…

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That Rumbling Sound Is the Dollar Giving Way

That Rumbling Sound Is the Dollar Giving Way

For nearly twenty years, we haven’t flinched from our prediction that the massive debt build-up of the last generation would precipitate out as a deflationary bust. That is what we still expect, although we now believe there is likely to be a hyperinflationary phase at some point as the financial system implodes. But the bottom line is that no matter how things play out, America’s standard of living will fall more steeply than at any other time since the Great Depression. As for the deflation-vs.-hyperinflation “debate,” it is useful only to the extent it helps predict how mortgage debtors will fare as this economic cataclysm plays out. We seriously doubt they will be “saved” by the kind of hyperinflation that would put hundred-thousand-dollar bills in Joe Homeowner’s wallet. Imagine how mortgage lenders would react if Joe could peel off three or four of those bills and say, “Okay, pal, we’re square.” This scenario will seem particularly unlikely to those who believe that these economic hard times have been engineered by Masters of the Universe intent on stealing our property. Trust us on this: If there’s a hyperinflation, it is the rentiers who will get screwed most ruinously, not the little guys. Even so, that doesn’t rule out the prospect of a fleeting, hyperinflationary spike on the way down, since widespread notions concerning the dollar’s true value could change precipitously overnight. We mention this because notions are already beginning to change in ways that leave the dollar increasingly vulnerable to a global run. The exploding caldera of fear that will eventually bring this about bubbled to the surface yesterday when the Fed confirmed yet again that it is absolutely clueless about how to get…

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Gerald Celente: US Economy = Depression

Filed in depression, economy, gld, Gold, obama, recession by on September 18, 2010 0 Comments

Famous investor and billionaire George Soros referred to the US economy as “blah,” saying he expects a further slowdown. US President Barack Obama has insisted however that the US economy is heading in the right direction. Gerald Celente, the director of the Trends Research Institute said the economy is not just blah, it’s in a depression. It’s the summer of the greatest recession,” he said.

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Why Might An Investor Consider The American Eagle 50 Dollar Gold …

Filed in currencies, depression, Gold, Indonesian Gold by on September 13, 2010 0 Comments

The recent world depression together with fears of a potential double dip depression has caused the stocks and currencies almost everywhere in the world to plunge and become too dangerous to work with as investment instruments. … The American eagle gold coin is the only bullion coin in the world that carries with it the guarantee of a national government. The United States government guarantees to the owner the coin’s purity, content and weight, which allows him to be …

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Eye of the Storm

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles. Having spent a great deal of my younger days in places where big waves break, I have seen my fair share of hurricanes. Old Earl is just one of many. But I can tell you from experience that there is nothing quite like the feeling you get when the eye of the storm passes over. It is truly surreal. Advertisement The Smart Grid: A Smart Investment It’s being called “the biggest investment of the next 50 years” by the CEO of GE. The likes of Cisco and Bank of America are also on the edge of their seats, anticipating the boom of smart grid technology. In fact a Bank of America (NYSE: BAC) analyst recently said they expect 80-140 million meters to be installed in the next 10 years — and a total smart grid investment of $215 billion in the next four to five years. This is going to be huge. The time to invest in smart grid technology is now — and we have all the details of how you can get in on pure plays in this report. The winds die down, the sun comes out, and for a moment (at least), it’s all over. And if you didn’t know what was on the other side of that eye, you’d think that you were home free… If only it were true. That, to me, …

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Waking Up in the 1930s

Filed in depression, economy, Gold by on September 4, 2010 0 Comments

n the year 2010, America once again embraced the bread line. That distant, faded, iconic black-and-white image of the Great Depression has re-emerged across the nation, waiting to be updated fully into HD color.

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Are We in a Recession or a Depression?

Are We in a Recession or a Depression?

Filed under: Forecasts , Market Matters , Economic Data , Federal Reserve , Recession Are we in a recession or a depression? A recession usually means a temporary dip in an otherwise growing economy. A depression is much worse, feeding on itself and dragging the economy lower and lower. A recession carries hope. A depression is pure hopelessness. We have all kinds of forecasts, from extreme optimism to bleak pessimism. Government officials and the mainstream media are touting this as a dip in a long-term growth cycle. Continue reading Are We in a Recession or a Depression? Are We in a Recession or a Depression? originally appeared on BloggingStocks on Thu, 02 Sep 2010 10:30:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments

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What’s Bad for Bernanke Is Worse for You

Bad day for stocks, Monday. A bad day. Not a terrible day. Not a crash day. Just a bad day. The Dow fell 140 points. This was baaaad…because it shows that the stock market does not really buy Bernanke’s storyline. You’ll recall that when we left off last week, Ben Bernanke assured the world that while the recovery was not exactly what he had hoped for, he nevertheless had the situation in hand. He said he had the tools necessary to fix the problem and would do whatever was required. The initial reaction was positive. The Dow rose more than 160 points on Friday. Some analysts thought the market’s downward trend had been broken. But it needed follow-through on Monday. Instead, the market fell. The fact is, there is no recovery…and no recovery is possible…and investors are beginning to realize it. Then what is going on? A “Great Recession,” say some analysts. A “depression,” say others. There is a good article in The Financial Times that helps understand what is really going on. It’s by Ken Rogoff and Carmen Reinhart; you’ve heard of them before, dear reader. They are the ones who researched dozens of episodes of financial crisis and sovereign default throughout history. Today, they write in the FT about what happens after a financial crisis. Well, what do you think? Do you think you get a “recovery”? Do things go back to normal? Is the recession over quickly and painlessly? Not at all. Instead, there is rarely anything you would…

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