economy

Iceland president rejects Icesave bill

Filed in AT T, Bank Gold, economy, Gold Spot Market, o by on February 20, 2011 0 Comments

The President of Iceland, Olafur Ragnar Grimsson, has decided that the latest Icesave bill will be sent to a public referendum.

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Market Week Wrap-up

– Leading global equity indices continued floating upwards this week while the inflation drumbeat just kept getting louder. In the US, the January y/y CPI figure hit +1.6%, its highest level since last spring, and some analysts were alarmed by higher food prices creeping into CPI data sooner than expected. China’s January CPI report was lower than expected at +4.9% y/y, but markets panned the figures as heavily massaged by basket revisions. In the UK, the BoE said CPI would likely continue growing at a 4-5% clip over the short term. The World Bank released a report indicating that food prices were up 15% since October 2010 and are now only 3% away from record highs hit in 2008. Commodities moves complicated the story somewhat. While silver has pushed out to 30-year highs, there were signs that inflated soft commodity prices were beginning to unwind, with cotton and grain prices both below recent highs. Crude and gold prices have been impacted by reports that Iran is sending warships through the Suez Canal and bloody protests in Bahrain (next door to Saudi Arabia), although WTI futures were well below recent highs seen in early February. The Obama Administration unveiled its $3.73T budget proposal for 2012, including an all-time high deficit of $1.65T, reflecting the tax-cut agreement reached with Republicans in December. For 2012, the administration sees the imbalance declining to $1.1T, giving the country a record four straight years of one trillion-plus deficits. Bond prices held steady after the details were released, and Congress sharpened its knives for a budget fight. The Feb Empire Manufacturing survey hit its highest level since last June, indicating that the US manufacturing expansion seen over the last several months is continuing. On Friday there was plenty of commentary out of the G20 conference, where leaders tried mightily to achieve some concrete steps in reforming the global monetary system. Fed Chairman Bernanke took a swipe at the Chinese in his policy address to the G20, warning that nations which keep currency values low create imbalances, while the PBoC’s Zhou continued to push for a higher profile for the IMF’s Special Drawing Rights (SDRs). For the week, the DJIA rose 1.0%, the Nasdaq gained 0.9% and the S&P500 was up 1.0%. – John Deere crushed earnings and revenue targets in its Q1 report and nearly doubled its guidance for FY11 equipment sales. The firm hiked its sales guidance for its key agriculture and construction units as well, and said its Q2 revenue would blow out consensus estimates. Later in the week Caterpillar released very favorable dealer metrics for the month of January, with North America machinery sales up a whopping 58% y/y in the month. – Iron ore miner Cliffs Natural Resources reported very strong Q4 profits on a big y/y gain in iron ore pricing. The company expects global steel production to continue to grow in 2011, although it warned that spot iron ore prices are unsustainably high. Reliance Steel also blew out earnings estimates, and said pricing would remain strong at least through the first quarter of 2011. – In tech, Dell’s profit was way ahead of the consensus in its Q4 report, thanks to a big improvement in margins. The company said it believes the corporate IT…

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Taiwan Semiconductor (TSM): Tech Turnaround

Filed in Bank Gold, economy, lead, o by on February 18, 2011 0 Comments
Taiwan Semiconductor (TSM): Tech Turnaround

Filed under: China , Newsletters , Stocks to Buy “Taiwan’s economy and its stock market should post solid growth in 2011; we also see warming relations between the island of Taiwan and mainland China,” suggests global specialist Yiannis Mostrous . The editor of The Silk Road Investor explains, “Technology should be a major beneficiary of these near-term themes and Taiwan Semiconductor Manufacturing ( TSM ) is our favorite stock for exposure to the technology turnaround. “Demand for notebook computers remains solid and mobile phones are expected to sell strongly during the Chinese New Year holiday this week, which will lead to inventory restocking. Continue reading Taiwan Semiconductor (TSM): Tech Turnaround Taiwan Semiconductor (TSM): Tech Turnaround originally appeared on BloggingStocks on Fri, 18 Feb 2011 13:00:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments

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Urban Magnets for Disaster

Filed in BP, deflation, economy, Ford, Gold, inflation, o, silver, ubs, US Dollar by on February 18, 2011 0 Comments

When it comes to bad stuff the sky’s the limit. It’s gonna happen, eventually…one way or another. And it could be real bad. And when bad stuff happens, you’re better off being somewhere else. Where? Generally, bad stuff seems to happen most often in cities. Why is that? Cities are where most people live. It is where governments are. And it is where the labor force is most specialized. There are no subsistence farmers living in cities. Nor do urban populations “live off the land.” Instead, they depend on complex networks of commerce. The typical city dweller produces neither food nor energy. He sits all day in an office — completely dependent on others to provide power and food. Then, he goes home — still completely dependent on the division of labor for his most important needs. Progress can be described as the elaboration of the division of labor. In man’s most primitive state, specialization is extremely limited. From what we’ve been told, the early man was the hunter. Early woman gathered…that’s about the extent of it. As the tribe grows larger, specialization increases. One person might tend the fire. Another might be in charge of making clothes or arrows. The advent of sedentary agriculture and towns caused a big leap forward in human progress and, not coincidentally, the division of labor. Some townspeople went out to tend the fields. Others began to focus on woodworking…or iron mongering…or making weapons…or clothes. Some played cards and hung around at bars. There was soon a homebuilding industry…and, not long after, merchants, prostitutes and bankers…and even shyster lawyers and tax collectors. As the division of labor expanded, the average person became richer…and more dependent on others. In order to eat, someone else had to plant…and till…and harvest…and hunt…and gather. And then, when agriculture became mechanized, he depended on faraway people who produced oil and gasoline…and people who built …

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Gallup: The Unemployment Rate is 10%

Gallup:  The Unemployment Rate is 10%

Jobs…jobs…jobs… I’m beginning to sound like a broken record but it’s true: This economy is going nowhere unless we start creating some jobs. As for the recent drop in the unemployment rate to 9.0%, I’m not buying it since it comes from Uncle Sam. The real figure is likely closer to what Gallup is reporting today… From by Dennis Jacobe entitled: Gallup Finds U.S. Unemployment Up to 10% in Mid-February “Unemployment, as measured by Gallup without seasonal adjustment, hit 10.0% in mid-February — up from 9.8% at the end of January. Underemployment, in which Gallup combines part-time workers wanting full-time work with the U.S. unemployment rate, surged in mid-February to 19.6% — mostly as a result of the sharp increase in those working part time but wanting full-time work. Underemployment now stands at basically the same place as it did a year ago (19.8%). The unemployment rate in mid-February is 0.8 percentage points lower than it was at this time a year ago, compared with a 1.1-point improvement at the end of January. This suggests that jobs are less available now than they were in January. More troubling, however, is the surge in underemployment. On this broader basis, current job conditions are barely improved from what they were at this time last year. Essentially, what has happened over the past year is that some people who were unemployed got part-time jobs but are still looking for full-time work. This is not much to show for a year in which many macro-economic indicators showed improvement. This is likely why Gallup’s self-reported spending

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Fidelity Select Healthcare (FSPHX): The Right Prescription

Filed in Bank Gold, economy, o by on February 17, 2011 0 Comments
Fidelity Select Healthcare (FSPHX): The Right Prescription

Filed under: Newsletters , Mutual Funds “We own a healthy dose of Fidelity Select Healthcare ( FSPHX ) in each of our model portfolios,” says fund expert Jim Lowell . The editor of Fidelity Investor explains, “Manager Eddie Yoon and I caught up this month. His command of the sector and his growth-oriented discipline continue to serve us well on both our risk-adjusted and real return fronts/ “Of course, healthcare (representing nearly 16% of our total GDP) is unlike any other sector in the S&P. It is so diversified and global, so interrelated to technology, manufacturing, and R&D, so dependent upon delivering real goods and services for consumer consumption, that it is almost an economy unto itself. Continue reading Fidelity Select Healthcare (FSPHX): The Right Prescription Fidelity Select Healthcare (FSPHX): The Right Prescription originally appeared on BloggingStocks on Thu, 17 Feb 2011 13:00:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments

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The Incredible Shrinking Middle Class

Filed in BP, Debt, economy, Ford, Gold, GOld juniors, inflation, Lear, o, recession, silver by on February 16, 2011 0 Comments
The Incredible Shrinking Middle Class

Here’s a copy of the chart of the day.As you might have suspected, the rich get richer while everyone else basically gets to tread water. The article that follows once again drives home a point I have been harping on for years now: The Middle Class in a state of terminal decline. And when it vanishes for good, America will be a very different place. If you ask me, in a lot of ways it already is…. From CNNMONEY by Annalyn Censky entitled: How the middle class became the underclass “ Are you better off than your parents? Probably not if you’re in the middle class. Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed. In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data. Experts point to some of the usual suspects — like technology and globalization — to explain the widening gap between the haves and have-nots. One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University. International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn’t exactly been a win for middle class workers in the U.S. Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages. “As we became more connected to China, that poses the question of whether our wages are being set in Beijing,” Rodgers said. Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for. As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s. In 1980, workers …

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Gold, Silver, Copper, Nickel and the Slow Death of Money

Gold, Silver, Copper, Nickel and the Slow Death of Money

A huge opportunity to hedge against both inflation and deflation is lying out there in the open. There are no transaction costs and right now there’s even a built-in discount. But most people will never realize any of this. In 1933 President Franklin Delano Roosevelt signed Executive Order 6102, which made it illegal for U.S. citizens to hold gold bullion. Prior to that, the $20 bill was essentially a warehouse receipt for a one-ounce gold coin. Prior to the Federal Reserve Act of 1914, the $20 bill actually told you this. After Executive Order 6102, $20 notes weren’t allowed to be exchanged for gold anymore. Americans couldn’t legally own or trade gold as money and savings, only as jewelry or collectible coins. A year after making monetary gold ownership illegal, FDR revalued gold from $20.67 per ounce to $35 an ounce with the Gold Reserve Act. The Act also required all gold and gold certificates to be turned over to the Treasury. The dollar was debased. A chunk of the gold it used to be good for was legally removed. Instead of  “containing” 1/20 an ounce of gold, each dollar now only contained (or represented) 1/35 an ounce. And of course you couldn’t actually own the gold itself. In 1971 Nixon severed the last official ties between gold and the dollar. The dollar quickly sunk to its real value, which had been debased by years of money supply inflation. By 1975 Americans were allowed to own bullion gold again, but during the roughly 40 years bullion gold ownership had been illegal, the dollar had been drastically debased. At its former lowest point in the summer of 1980, the dollar …

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How Savings and Investment Increase an Economy’s Output

Filed in BP, Debt, deflation, economy, interest-rates, Lear, o, silver, Spot Gold, target, US Dollar by on February 14, 2011 0 Comments

Everyone who has held a job and a bank account understands the potential benefit of postponing consumption today in order to enjoy greater consumption in the future. However, many people — if pressed — would explain this increase in saver’s income by an offsetting reduction in the income of a borrower in the economy. This is certainly a possibility. For example, if Bill (the borrower) forgets his lunch money on Monday, he might ask his coworker Sally (the saver), “Can you lend me $10 and I’ll pay you back $11 tomorrow?”  If Sally agrees, then it is clear that her $1 in interest on the personal loan was paid out of Bill’s reduced income for that month. In other words, if Bill’s take-home pay that month were $5,000, then he would actually only have $4,999 to work with, because of his $1 expenditure in “buying a loan” from Sally. At the same time, if Sally’s normal paycheck were also $5,000, then this particular month she would actually have $5,001 to work with, after earning $1 in providing “lending services” to Bill. In the scenario above, what basically happened is that Bill financed his consumption with an “advance” made by Sally. On the Monday morning is question, …

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How Gold Could Save America from Nazi Theory

Keynesian economics is the root of economic problems for most countries around the world today. So it’s important to understand both what Keynesian economics stands for and what the opposing brand of economic thinking called Classical economics maintains. In a nutshell… Classical Economics: Keynesian Economics: Thrift, hard work, and productivity are virtues. The classical gold standard restrains the state from inflating and provides a stable monetary environment in which the economy can flourish. Government should strive for balanced budgets and fiscal responsibility. The state should adopt a general policy of laissez-faire of non-interventionism in economic affairs: low taxes, free trade, and minimal bureaucracy. Production is more important than consumption. Say’s Law: Supply is more important than demand since supply of one good creates the demand for another. An increase in savings can contract income and reduce economic growth. Consumption is more important than production, thus turning Say’s Law upside down. There is no need for a gold standard; fiat currency is preferable. Demand is more important than supply. Teaches that governments and politicians can be trusted. It’s no wonder politicians love Keynesian economics over Classical economics. To control the economy, most governments around the world have been using Keynesian economics for the past 75 years. It is the only economic thought that is taught in the schools and universities. “They” want us to believe they are wise and intelligent souls who know what is best for us. But nothing could be further from the truth throughout most of economic history… Read this quote from Adolf Hitler, who openly embraced Keynesian ideas: Gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That’s the bastion of money. The Nazis’ economic success when Hitler first came into power was a result of Hitler cooking the books. The rest of his time in power goes down in history as one of the worst atrocities in the history of mankind. Only two other twisted power-seeking devils in the annals of time are responsible for the killing of more people than Hitler &mdash…

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A Self-Employed Carpenter’s Continued Thoughts on the Future

Filed in BP, Debt, deflation, economy, Gold, inflation, Lear, o, silver, US Dollar by on February 11, 2011 0 Comments

My first article on this topic concerned the sharp contraction of the residential construction industry in the U.S. I am a self-employed carpenter. The main thrust of that article was that the housing market is not going to recover to anything approaching its zenith. Bloomberg Business reported in January that housing starts fell again in December to a 529,000 annual rate. The annual rate in a good economy is considered to be a million new homes per year. The recent peak in 2005 was 2 million homes. Nationally, production for the residential construction industry has dropped about 75% off its peak. Inflation, lack of wealth, and rising energy costs preclude any great gains in housing output in the near future. The majority of the skilled construction workers will be doing something other than residential construction in the near future. What is it that we’ll be doing? First off, we are craftsman. “Craftsman” is a mind-set, a personality type. Throughout history, craftsmen have exchanged their labor, skills, and ideas for the expendable wealth of those who have it. That is the ball upon which we need to keep our eye. Many of us will likely still be craftsman in the next economy. The best-run construction companies will be able to get lean enough to live through the hard times and carve out a niche in the new residential construction industry. Most companies and individuals will not make it back. The current overextended financial situation in the U.S. will cause our world to “shrink.” Inflation and sharply rising fuel prices will force a lot of economic activity back down to the community level. Many things that we currently take for granted will become more difficult to obtain. Acquiring food, fuel, heat, and shelter will take on a greater importance in the day-to-day life of the middle class. I’m not talking about the Apocalypse. I’m just saying that things will not be as comfortable as they once were. You and your fellow middle classers will be conducting more business within your neighborhoods and communities. What do we craftsman do in the transition? First of all, keep your hand in the old construction game as long as you can. Do not create new debt for yourself. Do not bid jobs so close to the bone that you have no wiggle room. If something goes awry, and it usually does, you will have either new debt or legal problems. Speaking of new debt, get out of your old debt. The leaner you emerge from this transition period, the better your choices will be. If you have any liquid assets, consider owning some physical silver. Cash will be eaten …

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Zillow: Home Values Lose Another $2 Trillion

Filed in BP, economy, EPS, Gold, GOld juniors, Gold Market, housing-market, Lear, o, revenue by on February 9, 2011 0 Comments
Zillow: Home Values Lose Another $2 Trillion

Anybody that thinks housing has reached a bottom needs to have their head examined. If you doubt that just ask the fine folks at Beazer Homes (NYSE:BZH) who reported a loss of $48.8 million, or 66 cents a share, down more than 200% from a $48 million, or $1.17 per share, income a year earlier. That dismal effort came on revenue that plummeted 48% to $110.3 million from $213.1 million just a year earlier. Meanwhile the spring is really not looking that much better. Beazer reported a total of 527 home closings and 540 new orders during the period, down 43.6% and down 23.9% respectively. Of course, that what happens Uncle Sam steps out of the mix with tax goodies and rebates—the market falls apart. Because the truth is despite historically low interest rates, the demand for homes of all types remains at exceptionally low levels. That’s true no matter what Lawrence Yun says. The end result is falling prices and more borrowers left underwater…. From Bloomberg by John Gittleson entitled: Home-Price Drop Leaves 27% of U.S. Owners Underwater on Loans “ The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, according to Zillow Inc. About 15.7 million homeowners had negative equity, also known as being underwater, at the end of the year, up from 13.9 million in the previous three months, the Seattle-based real estate information company said in a report today. The total represented 27 percent of mortgaged single-family homes, the highest in Zillow data dating to the first quarter of 2009. Home prices are declining as foreclosed properties sell at discounts and unemployment at 9 percent limits buyer demand. Values will fall as much as 5 percent this year, putting more homeowners underwater, before finding a floor as the economy improves, said Stan Humphries, Zillow’s chief economist. “ These seem like fairly grim numbers,” Humphries said in a telephone interview. “We’re still expecting a bottom in home values later this year. And this, if anything, makes me a bit more confident because I’m seeing very large corrections now, which means the market can start to repair itself.” The median value for a U.S. single-family home was $175,200 in the fourth quarter, down 2.6 percent from the end of September and 5.9 percent from a year earlier, according to Zillow. Values have fallen 27 percent from the June 2006 peak. Las Vegas led the nation in …

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