Wednesday, February 10, 2010

Wars Sending U.S. Into Ruin

U.S. President Barack Obama calls the $3.8-trillion US budget he just sent to Congress a major step in restoring America’s economic health.

In fact, it’s another potent fix given to a sick patient deeply addicted to the dangerous drug — debt.

More empires have fallen because of reckless finances than invasion. The latest example was the Soviet Union, which spent itself into ruin by buying tanks.

Washington’s deficit (the difference between spending and income from taxes) will reach a vertiginous $1.6 trillion US this year. The huge sum will be borrowed, mostly from China and Japan, to which the U.S. already owes $1.5 trillion. Debt service will cost $250 billion. (more)

Jay Taylor: Turning Good Times Into Bad Times

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How to invest for a global-debt-bomb explosion

Wake up investors. Are you prepared for the economic anarchy coming after a global-debt time bomb explodes? Are you thinking outside the box? Investing differently? Act now -- tomorrow will be too late.

Start by looking past the endless cable skirmishes between Rush, Glenn, Bill and Shawn versus Harry, Nancy, Ben and Barack. Look way past the insurgency bonding Sarah and her diehard Tea Party revolutionaries with Ron Paul's Neo-Reaganite ideologues, Fat-Cat Bankers and the Party of No, all planning a massive frontal assault on the 2010 elections, hell-bent on destroying the presidency. All that's the sideshow.

The Big One is coming soon, bigger than the 2000 dot-com crash and the 2008 subprime credit meltdown combined. A huge market blowout. And as Bloomberg-BusinessWeek predicts: "The results won't be pretty for investors or elected officials." (more)

The Future of Uranium

“The next few years should be good times for those that produce uranium, the feedstock for nuclear reactors,” Chris Mayer reports. Chris spent time in Australia last week with some key uranium insiders, including Rick Rule and the co-founder of Cameco. These are some of his findings:

“In looking at supply and demand, it seems clear that we’ll need more uranium than we mine now. At least if we expect to run all the power plants that are on the board. The World Nuclear Association (WNA) reports there are 50 nuclear reactors under construction around the world that’ll need some 23 million pounds of U308. (U308 is the oxide you get when you mine uranium ore.) There are 432 more on the planning board. Based on these projects, the world’s nuclear power production will more than triple from 2008–30.

“Not surprisingly, China has a big role to play here. Its power needs are growing dramatically. China has only about a dozen reactors today, which supply about 3% of its power needs. But the growth curve is steep. The WNA says there are 15 more under construction, which will more than double China’s nuclear capacity. It has another 114 either planned or proposed. If everything gets built, that will be nearly a fourfold increase.

“Also, I want to say a few words about the uranium mania of 2007, which cracked in 2008, along with most things. In 2007, there was certainly a uranium rush. Besides the small circle of established players that were actually producing uranium, there were over 750 exploration companies created to look for more. Almost all of these flamed out in 2008 as the uranium price sank and the credit crisis finished off the wounded.

“Thinking in contrary fashion, it looks to me that uranium is due for an upturn. Investing well often requires you to buy what is out of fashion or what has done poorly. Uranium is a pretty good candidate, as the price of U308 has done nothing but fall since peaking in the summer of 2007.” Agora Financial

Roubini: Dollar Will Drop 15 to 20 Percent

The dollar’s recent rally, which has taken it to a six-month high, will soon fade against Asian and commodity currencies, says star economist Nouriel Roubini.

Commodity currencies include the Brazilian real, Canadian dollar and Australian dollar.

He anticipates a 15 percent to 20 percent drop by the greenback against these currencies in the next two to three years.

And what will cause the move?

“I see anemic recovery of economic growth in the U.S., and the U.S. current account (deficit) is still very large,” Roubini, a professor at New York University, said at a Moscow conference, according to Bloomberg. (more)

Faber: Debt Interest Will Lead to Default, Then War

At a conference in Moscow, Marc Faber laid out the crisis that he sees coming in the next 10 years: Interest on U.S. debt will crush other spending, then inflation and depression will take hold and eventually lead to war.

“Maximum, within 10 years time more than 35 percent of tax revenues will have to be used to pay the interest on the government’s debt, and then you’re in trouble, because then there is not enough money out of the budget to pay for other stuff,” Faber said.

“I am convinced that the U.S. government will go bankrupt, but not tomorrow, and before they go bankrupt they’ll print money, and then you get very high inflation rate, then you get depression with high inflation and eventually they’ll go to war.” (more)

Australia close to defaulting on debts: Joyce

Opposition finance spokesman Barnaby Joyce is courting controversy again, warning that Australia is getting to the point where it will not be able to repay its overseas debt.

Senator Joyce says the Federal Government is borrowing billions of dollars from overseas to fund stimulus spending and programs like the National Broadband Network.

And he has questioned whether the Government is in a position to repay those loans.

"We're going into hock to our eyeballs to people overseas," he said. (more)

The Transfer of Risk from Wall Street to Main Street – How the Bailouts Shifted 3 Gigantic Risks from Wall Street in Housing, Banks, and Jobs to Avera

There is a false security in our current economy. The belief that the current banking industry is now healthy simply because the government supports it is misguided in valuing the real risk inherent in back stopping Wall Street. Or the idea that deposits are safe up to $250,000 in commercial banks because the FDIC seal is on the door. Keep in mind the FDIC insurance fund is now insolvent. Or the notion that jobs are no longer needed for a recovery. This of course is all false. What has occurred under the veneer of stabilizing the banking sector is that the ultimate risk has now been transferred to the American taxpayer. It has already been made clear to Americans that no too big to fail bank will fail. Yet does this somehow fix the trillions in toxic assets that still remain? It doesn’t but what it does do is shifts the risk to the average American. (more)

Canadian Prime Minister Delivers Global Governance Plan

During the January 2010 World Economic Summit in Davos Switzerland Prime Minister Stephen Harper, the current Chairman of the G-20, presented the upcoming agenda for the G-20 and G-8 meetings to be held in Ontario in June. Many were shocked to hear this Conservative leader declare that “we also know markets need governance. For the new global economy, the G-20 is what we have.” Harper went on to speak as an avowed Keynesian committed to a one world global economy, creating a world “we have been trying to build since 1945”.

He went on to warn the world that national self interest sovereignty must be opposed to stave off a greater crisis than the current recession. For the next several months leading up to and including the G-20 meetings, Stephen Harper will be attempting to convince the world to find global unity of purpose and adopt what he calls “Enlightened Sovereignty”. (more)

Goldman Sachs Wants You to Pay-by-the-Mile to Drive on U.S. Roadways

According to an independent British newspaper editor, in the not-so-distant future, English drivers will be charged based upon the number of miles they drive, as is being done step-by-step in America.

On January 12, AFP interviewed Mike Robinson, the editor of the UK Column, a liberty-minded newspaper not unlike AMERICAN FREE PRESS.

“Road charging,” as it is called in England, is widespread, he told AFP, as fiber optic cable has been laid along most English roads to help track vehicle travel by the mile so drivers can be charged. (more)

The Bankrupt PIGS of Europe

They are called the PIGS—Portugal, Ireland, Greece, Spain. What they have in common is that all are facing deficits and debts that could bring on national defaults and break up the European Union.

What brought the PIGS to the edge of the abyss?

All are neo-socialist states that provide welfare for poor people, generous unemployment, universal health care, early retirement and comfortable pensions. Most consume 40 percent to 50 percent of their gross domestic product annually, a crushing burden on the private sector. (more)

Marc Faber and Jim rogers Prague meeting 2010 part 1/5