Tag: inflation

Will This Be The USA in 2012?

Filed in BP, economy, Gold Prices, inflation, o by on January 15, 2011 0 Comments

The economic condition of the country continues to decline toward its rendezvous with an, as yet, unknowable catastrophe. Here is… a look (not a prediction) at a series of not improbable events that could develop [and which] would change our economic world overnight. Words: 1550

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It’s Time for Bernanke to Just Go Away

This was taken from Wealth Wire, which you can still sign up for here … It’s FREE! Enjoy. I have no confidence in Ben Bernanke… I don’t care what degrees he holds, or what he studied about the Great Depression. He’s done nothing but take us to the abyss… and lie to us, all to save the financial system. He doesn’t beleive inflation is a problem. But it is. He said he’s not monetizing debt. But he is. He’s willing to continue further easing as long until unemployment improves… but it’ll do nothing more than hurt us more. And now he wants us to believe a recovery is sustainable. Too bad he’s wrong. Here’s more from Reuters: “The U.S. economy may be finally hitting its stride, even if growth remains too weak to put a real dent in the nation’s jobless rate, Federal Reserve Chairman Ben Bernanke said on Friday. Offering no real clues on the future direction of monetary policy, Bernanke sounded cautiously more upbeat than he had in his most recent public remarks, citing improvements in consumer spending and a drop in claims for jobless benefits as hopeful signs that a languid recovery was perking up. “We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,” the central bank chief said in his first testimony to Congress since the Fed launched a controversial plan to buy an additional $600 billion in government bonds. His remarks were made public just an hour after the Labor Department reported the economy generated a disappointing 103,000 jobs in December. The jobless rate dropped to 9.4 percent from 9.8 percent, but the decline was partly due to a troubling rise in the number of people exiting the workforce. Just a month ago, in an interview on the CBS program “60 Minutes”, Bernanke had voiced a degree of trepidation about the economy’s

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A National Debt That Will Never Be Repaid

As you read this, the U.S. government owes just a sliver under $14 trillion dollars to various suckers who’ve lent it money. And it wants to borrow more. Timothy Geithner warned that a failure to raise the debt limit would mean the government would not be able to make the payments on the current debt in the very near future. Consult the official record and you’ll read that the U.S. has never defaulted on its obligations. That’s technically true…but then what about when France’s prime minister Charles de Gaulle politely asked the U.S. to hand over the gold it promised was backing the U.S. dollars held by France and other nations? “No gold for you!” Nixon was heard to say. That’s because the U.S. had printed a lot of dollars in order to pay for Lyndon Johnson’s social programs and war (among other things). There was no way that the ratio of dollars to gold held by the U.S. was still anywhere near an amount that would support the official $35/oz. What was the real price of gold with all those extra dollars floating around? Who knows? But when they were allowed to own gold again beginning in 1974 Americans bid gold up to over $887/oz in just six years. Nixon knew back in 1971 that there was no way the U.S. could make good on the dollar at the official rate. The official rate was a lie. If every yahoo with $35 U.S. were to show up at the gold window then, only a small percentage of them would get their gold. So Nixon “closed the gold window.” But a default by any other name apparently isn’t really a default. And now Mr. Geithner tells us that in order not to default, the U.S. government has to take on more debt. Remember, there are certain ways government gets purchasing power… Steal it directly by openly taxing its subjects (on income, payrolls, transactions, imports, exports, etc)… Steal it sneakily through currency debasement (inflate paper money supply or clip the coins). Borrow it. Number three really isn’t really income, however. And it often leads to number two. Geithner just admitted that if the U.S. doesn’t borrow more than the current debt ceiling allows, the government wouldn’t be able to meet its obligations. When you can’t pay for your expenses — including the interest on the debt you already owe — is it really a good idea to borrow more? Maybe you should cut up the credit card, move to a smaller apartment, sell the car and take public transportation, stop eating out so much…any of these things in any combination would help. Borrowing more to fund your lifestyle doesn’t make the list. It just guarantees there will be even more pain to reckon with later. Borrowing is what got them in this jam. Raising the debt ceiling at this point is about as healthy …

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Fed Members Differ on Economic Outlook

Fed Members Differ on Economic Outlook

Filed under: Economic Data , Federal Reserve , Recession The Federal Reserve has embarked on a controversial new program of buying $600 billion of U.S. Treasuries to keep interest rates low and spur the economy. There is some disagreement among some members of the Fed concerning the risks of this new program. Some fear that the economy is growing too rapidly, fueling unwanted levels of inflation, as reported by CNNMoney . Continue reading Fed Members Differ on Economic Outlook Fed Members Differ on Economic Outlook originally appeared on BloggingStocks on Wed, 05 Jan 2011 12:00:00 EST. Please see our terms for use of feeds . Read | Permalink | Email this | Comments

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Forget Buying in the Suburbs and Go Rent in the City

Filed in BP, Debt, deflation, inflation, lead, o, silver, Spot Gold, target by on January 5, 2011 0 Comments

It’s getting more expensive to live in Baltimore….at least if you’re a renter. According to a recent article in the Baltimore Sun rents are up more than 6% over what they were last year in the Baltimore metro area. If you count the drop in various concessions — like waived application fees or initial free rent — then the increase is even more. There is a drag on the rental market, however: the regretful buyers who now need to rent out the homes they can’t sell. Lois Foster, a Baltimore real estate agent who helps people find homes to rent and manages properties for owners-turned-landlords, said she’s seeing rents of $200 to $500 less a month than owners could have gotten two or three years ago. There’s just a lot of competition, she said. The gild is off the buying lily. All the credit that oozed out of the banks found its way into the national psyche. There it gave off a funny smelling gas that puffed up hopes and dizzied senses. Stock prices were the first beneficiaries. Fattening 401(k)s danced 1920’s-style energetic jigs with dreams of early retirement. Even as those 401(k)s and those hopes tired and finally dropped dead on the dance floor, the Fed held down interest rates and more funny air kept the nation high. People pinned new hopes on — and sent reams of borrowed new money into — real estate. That’s come to the sort of end you’d expect. While government cheerleading and easy credit drew in increasing numbers of bigger fools, the rental market found itself a lot emptier. All the people who really couldn’t afford to buy and who should have been renting were too busy buying on greater margins and not renting. Some hotspot cities like New York and Boston saw their rental markets surging along with their real estate markets…but third-stringers like Baltimore… “Cohan, with Southern Management, said some competitors were offering as much as three to four months of free rent to get people in the door in 2008 and 2009. Not anymore.” It’s no wonder that they were having such a …

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Bumpy Road Ahead for Gold and Blue Chip Stocks :: The Market …

Filed in African Gold, Bank Gold, Debt, Gold, Indonesian Gold, inflation, o, silver by on December 28, 2010 0 Comments

So what we’re doing now is buying what we think are the best hedges against inflation—energy, agriculture and hard money—silver and gold bullion . We’re also selling short lots of stocks that are overly in debt or are obsolete, …

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2011 Stock Market Predictions

2011 Stock Market Predictions

I have no idea what will happen in 2011. None whatsoever… But who would? Main Street has just about given up on Wall Street, withdrawing some $77 billion from mutual funds. We’ve watched as Bernanke lied to us about dollar monetization and inflationary threats… We witnessed the Fed pump billions into the pipelines, the fight over health care, Greece’s implosion, imbecilic actions in D.C., stupidity on trading room floors, unrest in Europe, dollar devaluations… and so much more. And someone is supposed to know what’s coming next? As we say goodbye to 2010, here’s what the smart money seems to be betting on: Commodities will continue to explode. Gold will rally to $1,500. Silver will break $30… again. Copper will nail new highs. And oil could easily run amok above $100 a barrel again. Coal will spike higher. FBR Capital just upped 2011-2012 coal prices by about 9.5% and 5.8%. “Part of our steam-coal price forecast is tied to higher exports and raising our natural-gas price forecast to $5.50 per thousand cubic feet (Mcf),” they said. And there’s news of power plant coal shortages in China, which supports higher demand. Buy if you haven’t yet. Rare earth stocks will skyrocket on supply-demand issues. China is increasing tariffs, and there’s no end to low export quotas out of China… Molycorp (MCP), Rare Earth Elements (REE), the Rare Earth ETF (REMX), and our $1.50 Greenland stock will pick up momentum. Buy rare earths now. Housing will not recover— not until 2014 at the earliest. And banks will suffer. Mortgage troubles are rising as prices continue to fall in vulnerable markets; there aren’t enough buyers to pick up the overhang, declines, or coming foreclosures. Even RealtyTrac doesn’t see a recovery until 2014. And don’t forget that mortgage rates will rise again in 2011, dampening any demand and cutting back on affordability. The agflation threat will continue to increase …

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The Scariest Thing about Bernanke

The Scariest Thing about Bernanke

“The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.” — Bertrand Russell “One hundred percent.” — Ben Bernanke, on his confidence that the Fed will control inflation Lately, I can’t help but reflect on Ron Paul’s End The Fed (ETF). It’s been over a year since I finished the book, yet I keep pulling it off the shelf. Throughout, Paul writes insightfully about politics and money in America. Like this part about the Bernank : Some people have been surprised by Bernanke’s irresponsible conduct of monetary policy. There was no reason to be surprised. He was on record promising unlimited amounts of inflation should the need arise. If Greenspan was cocky about the genius of central bankers, Bernanke is even more so. Congressman Paul— unlike some — is careful with his words. You don’t get many sexy sound-bytes out of the Rep. from Texas. So when he says Bernanke is worse than Greenspan (my interpretation, based on this and other passages in ETF ), it’s noteworthy. To be sure, moral hazard flourished under his predecessor. The notorious “Greenspan put” offered an implicit backstop to banks and kept monetary conditions plenty loose. Bernanke and the current monetary regime, though, are taking things further. They are determined to keep rates lower than any time in history, indefinitely. This will lead to pervasive malinvestment, bank bonuses, and price inflation. Meanwhile, retirees will continue to collect pitifully low income on their CDs. But don’t worry; Wall Street bonuses are safe. Any bank that can’t make money in this environment should have their damn head examined. Borrow money at 0%, buy higher-yielding assets. Dip into various gov’t giveaways, let the bonuses flow, change accounting rules to conceal losses. Rinse, repeat. Financial sector profits are back up to 42% of all corporate profits in the United States — an absurdly high level. None of this should come as a surprise I guess, with Bernanke, William Dudley, and a few others at the helm of the Fed. Clearly, ” the Bernank ” has even less of an issue with moral hazard than Greenspan did, and under his leadership the Fed is even more determined to “ease” monetary conditions. Robbing the middle class and savers blind and enriching the banks are just unfortunate consequences of what’s good for the economy …

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I Want Me Gold

I Want Me Gold

The price of physical gold hit a three-month high in London this morning on news that the Chinese were not going to hike interest rates. Most traders were expecting the Chinese to hike rates to stave off inflation, which is now at a 28-month high of 5.1%. In an effort to hedge against this inflation, Chinese retail investors are turning to gold. In Friday’s Wealth Daily , Luke Burgess wrote: China’s gold imports to jump 457% this year. The Shanghai Gold Exchange recently revealed China’s gold imports jumped almost fivefold in the first 10 months of this year. And even though China is the world’s #1 producer, the country is expected to import 9.2 million ounces of gold this year as inflation concerns lifts investment demand. Albert Cheng, managing director of the World Gold Council’s Far East department, said at a recent conference in Shanghai that China’s gold investment demand may reach 150 tons this year — a 42.9% increase compared to 2009. New renminbi gold contract Demand is so high in China that the Hong Kong bullion exchange will launch the first international gold contract denominated in renminbi in the spring of 2011. According to The Financial Times , “The new contract comes as China pushes for greater international use of the currency and as Hong Kong’s precious metals industry seeks to take advantage of booming gold demand on the mainland.” The exchange expects trading volume will see a 20% increase when the renminbi gold bars hit the market. Currency flees China In light of Chinese inflation fears, the renminbi is flowing out of the mainland and into Hong Kong. Deposits jumped 45% in October from September to US$32.5 billion— helped along by currency restrictions, which were lifted in July. Demand is expected to increase so much that the Hong Kong government set up a high-security gold vault for overseas investors to store their gold. The tale of three charts The combination of currency wars and inflation in China means that both gold and oil are on the verge of breaking out. The U.S. Dollar Index is at a crossroads… As you can see, the Dollar Index against a basket of currencies is in a long-term downward trend and below its 200-day moving average. At the same time, there is support at 76. I expect it will trade in this range for the rest of 2011 as the fight between global flight to safety and the bond vigilantes work themselves out. Oil pushing a breakout We have a new range for crude as it is bouncing between $87 and $91 a barrel. As the global economy gets back on track, we should see oil breakout above $91. The Wall Street Journal ‘s survey of economists raised their projection for GDP growth to 2.6% for 2011, up from 2.4%. Both FedEx and UPS are gearing up for their busiest day ever today; UPS expects to ship 16 million packages up 13% from last year. Shipping companies are leading indicators. I want me gold The price of gold continues to stair-step higher. There are a number of things that could drop the price of gold: A massive new discovery on the scale of Spain’s discovery of South American gold mine could swamp demand; Or governments could tie…

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Ultra-Deepwater Rigs are Back

Ultra-Deepwater Rigs are Back

Ben Bernanke, head of the Federal Reserve, went on 60 Minutes over the weekend and talked about a third round of quantitative easing (QE3). I’m of the opinion that you can’t spend your way out of a debt crisis, but Ben believes in “priming the pump” by spending — or loaning to banks, anyway. And by banks, we mean the massive trading companies that got us into this mess to begin with. Bernanke thinks that by giving money to banks so that they can loan it will spur small business growth and other spending… The problem is that money is like your ex-girlfriend; it goes where it is treated best. And right now, the market believes that the commodity super-cycle spurred by emerging market demand and inflationary fears will continue to push higher. Unintended consequences As I write this, oil is running just shy of $90 a 26-month high. Gold popped up to $1,424 — a near record. Silver is at a 30-year high. According to the Associated Press , Bernanke said he hopes the Fed’s bond buying will lower bond yields and encourage investment in stocks, boosting business activity and economic growth in the country. But what is happening is that — at a time when we need inexpensive commodities to lower costs — we have record prices in coal and gasoline will average more than $3.00 a gallon by Christmas. If you remember the sharp rise in commodity prices (most notably oil to $147 a barrel) crushed the U.S. economy back in 2008. The low price of oil ($33bbl) coincided with the bottom in March of 2009. (Oil is black, SP500 is gold in the chart below): The shakeout in commodities also took out a host of highly-leveraged hedge funds as they got crushed with margin calls. The New York Times reported in March 2009 that more than 200 hedge funds went under with losses of $84 billion. In December 2008, I recommended buying four gold companies that were trading at less than cash at the time. This was back when gold miners were sold off to a negative market value during a severe economic crisis, and when the gold price was moving up as a safe haven. That is the power of speculators in the commodities market. And right now, the speculators are being fed free money from Ben…

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There is No Food Inflation; the BLS Made Sure of That

“Moreover, inflation has been declining and is currently quite low, with measures of underlying inflation running close to 1 percent… In this environment, the Federal Open Market Committee (FOMC) judged that additional monetary policy accommodation was needed to support the economic recovery and help ensure that inflation, over time, is at desired levels.” -Federal Reserve There is No Food Inflation; the BLS Made Sure of That originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

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Trade The News Weekly Market Update

– Volatile trading has been the rule during the Thanksgiving-shortened week. In weekend negotiations with the ECB and the IMF, Dublin dropped its initial reluctance to a bailout and agreed to accept funds. Having evidently learned a lesson from the painfully drawn-out Greek crisis earlier in the year, European partners are rushing to finalize details of a rescue package, which will apparently amount to €85-100B, and will include funding from the ECB, the IMF and the UK. Meanwhile, contagion from the sell-off in Irish bonds has already driven risk spreads in Portugal and Spain to record levels, as S&P exerted additional pressure by cutting Ireland’s sovereign rating two notches. On Tuesday North Korea shelled a South Korean island in one of the most dramatic attacks on the nation since the end of the Korean War. The attack sent US and European equity indices tumbling and completely sidelined the relatively strong second reading of US Q3 GDP. Key economic data in the US was also in play this week. After growing in September, existing and new home sales returned to declines in October; sky-high inventories helped push median new home prices to lows last seen in 2003, raising concerns about a double dip in housing prices. The October durables data was also cause for concern, as the nondefense capital goods figure (ex aircraft) was down 4.5%, missing nearly all estimates, though it was cushioned by an upward revision in the prior month. Hope was seen in the weekly initial jobless claims, which fell to their lowest level since July 2008, possibly portending sunnier results in the November payrolls report next week. For the week the DJIA fell 1%, the S&P500 dipped 0.9%, and the Nasdaq gained 0.7%. – It was a big week for private equity deals. An investment group struck a deal to buy software developer Novell for $6.10/share in cash, in a deal valued at $2.2B. The acquiring firm Attachmate, a provider of technology services, is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thomas Bravo. Takeover chatter starting last week materialized in a private equity deal for Del Monte Foods, as a group led by KKR announced it would buy the foods company for $19.00/share. Clothier J. Crew confirmed it would be acquired by TPG and Leonard Green for $43.50/share. Blackstone lost its $602M bid to buy power producer Dynegy after failing to win shareholder support, likely forcing the company to find another buyer, sell assets or restructure. Blackstone met strong resistance from Dynegy’s two largest shareholders, Carl Icahn and hedge fund Seneca Capital. Elsewhere, German fertilizer giant K+S said it would acquire Canada’s Potash…

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