Thursday, March 4, 2010

American reliance on government at all-time high

The so-called "Great Recession" has left Americans depending on the government dole like never before.

Without record levels of welfare, unemployment and other government benefits as well as tax cuts last year, the income of U.S. households would have plunged by an astonishing $723 billion — more than four times the record $167 billion drop reported last month by the Commerce Department.

Moreover, for the first time since the Great Depression, Americans took more aid from the government than they paid in taxes.

The figures show the devastating results of the massive job losses last year and indicate that the economic recovery that began last summer is tenuous and has a long way to go before many Americans resume life as normal, analysts said. (more)

McAlvany Weekly Commentary, March 3, 2010

An Interview With John Embry: “Expect Gold To Gain More Than 30% This Year”

March 3rd, 2010
icon for podpress Standard Podcast: Hide Player | Play in Popup | Download

$1 Trillion Mortgage Bomb Still Ticking Away

How close are we to being back to square one with impending mortgage meltdowns? According to SNL Financial, much closer than anyone would like to think. It has gotten a hold of an updated version of the original 2007 Credit Suisse chart that such caused a stir at that time. It’s reprinted below along with a few of SNL’s thoughts on the matter.

From SNL Financial:

“Most of the resets are expected to occur through 2012. Between 2010 and 2012, the chart indicates that $253.25 billion of option ARMs will adjust, while Alt-A loans totaling $163.71 billion will reset over that time. Altogether, $1.010 trillion worth of ARMs will reset or recast during the three-year period… (more)

Consumer-Stock Rally May Help S&P 500 Rise: Technical Analysis

The rally in U.S. consumer stocks indicates the Standard & Poor’s 500 Index has the momentum needed to surpass the 15-month high it reached in January, Oppenheimer & Co.’s Carter Worth said.

The Consumer Discretionary Select Sector SPDR Fund, an exchange-traded fund tracking 80 stocks such as Nike Inc. and Gap Inc., rose 1.6 percent on March 1 to $31, a level last seen in September 2008. The ratio between the ETF and another that tracks the entire S&P 500 climbed to 0.277, the highest since January 2007. When the ratio rises, it means consumer shares are outperforming.

Gains by companies reliant on consumer spending, which accounts for about 70 percent of the U.S. economy, show the market can overcome speculation that the recovery is slowing, Worth said. After the biggest rally since the Great Depression, the S&P 500 lost as much as 8.1 percent during the past six weeks as investors bet that the labor market isn’t improving fast enough and that European budget deficits will slow growth. (more)

Corn another buy signal

Gold Silver Rise, American Wages Security Lifestyle Decline

Charts the GAO Doesn’t Want you to See

The postponed 2009 Fiscal Year Financial Report of the United States was finally released this past Friday night with little fanfare and after a quick review, one could see why they really did not want to promote this report. The fiscal condition of the U.S. can best be described by one word: HORRID. Instead of just rehashing the same old statements you will hear on the MSM every day, I thought I would display some of the charts from the report and let them speak for themselves. (more)

Economists Warn Another Crisis on the Way

Without strong financial regulatory reform, the economy may fall right back into recession, warns a report from prominent economists, bankers and former regulators.

The group includes Nobel laureate Joseph Stiglitz, United Nations economist Rob Johnson and bank bailout watchdog Elizabeth Warren.

The problem is that banks continue to use borrowed money to take outsized risk, the report says.

So without regulation to halt that practice, the financial system is caught in a “doomsday cycle” that ends with bailouts, the report says.

"Risk-taking at banks will soon be larger than ever," the report says, according to ABC News. (more)

Faber: Stocks Can Fall 20 Percent if New High Hit

U.S. stocks may drop 20 percent if they top their January highs, says investment guru Mark Faber.

The Standard & Poor’s 500 Index reached a high of 1,150 Jan. 19.

“I’m not sure we will make a new high,” Faber, editor of "The Gloom, Boom & Doom Report," told Bloomberg.

“But if we do, I don’t think it will be that far – maybe 1,200 – and then I wouldn’t rule out a correction of at least 20 percent.”

On the currency front, Faber says the euro is very oversold, trading at about $1.35.

“The news has been horrible for the euro zone,” he said. “I think the euro can rebound to $1.40 before it goes lower.” (more)

Ron talks to Fox Business News about the coming collapses

Chart of the Day