Thursday, June 17, 2010


McAlvany Weekly Commentary, June 16, 2010

Israel and the Middle East: David McAlvany from Jerusalem

icon for podpress Standard Podcast: Hide Player | Play in Popup | Download

Ten Benefits of Expatriation

Everybody has their own personal reasons for expatriating, but here are some of the benefits:

1) Freedom from the global US tax net. Taxing you no matter where you breathe on this earth is wanton American exceptionalism. What other nations don’t dare do to their citizens, the US government doesn’t think twice about. Once you renounce, it’s your choice either to live the rest of your life free of any tax net, or to pick a place you want to be year-round and opt into the tax system (assuming it’s not a tax-free jurisdiction). If you do, you’ll at least know you have the freedom to walk away from it by simply moving elsewhere. (more)

S&P 500 Climbing Past 200-Day Average Signals Gains

The advance in the Standard & Poor’s 500 Index that sent the gauge above its average level in the last 200 days yesterday may spur more gains as investors become convinced the rally will last.

Signs the U.S. economy is expanding pushed the benchmark index for American equities up 2.4 percent to 1,115.23 yesterday, erasing its loss for the year and exceeding by 6.5 points the level monitored by investors who base trading decisions on chart patterns. The S&P 500 rose near the 200-day mean on June 3 and May 27 before declining as much as 5 percent in the next two days, according to data compiled by Bloomberg. (more)

Asian Nations Impose Curbs to Slow Expanding Property Bubbles

From Shanghai to Singapore, policy makers are struggling in their efforts to curb property bubbles that threaten to derail the world’s fastest-growing region.

In China, home prices are surging at a record pace even after authorities set price ceilings, demanded higher deposits, and limited second-home purchases. In Hong Kong, where the government has pledged to release more land to cool prices, a site auctioned on June 8 fetched the most since the market peak of 1997. It’s a similar story in Singapore and Taiwan as prices defy cooling measures. (more)

Experts: Lumber Prices Fall, and Economy May Follow

Prices of lumber and other raw materials are slumping, and that puts the economy at risk of a double-dip recession, experts say.

Until recently, many economists were concerned about an outbreak of inflation. But in the wake of Europe’s debt crisis, many are now worried about deflation.

Prices for framing lumber have dropped 21 percent just in the last five weeks, according to the National Association of Home Builders, reports.

Other industrial material prices are slipping in synch. (more)

Soros Warns European Recession Is 'Almost Inevitable' Next Year

Europe faces almost inevitable recession next year and years of stagnation as policymakers' response to the euro zone crisis causes a downward spiral, billionaire U.S. investor George Soros said.

Flaws built into the euro from the start had become acute, Soros told a seminar, warning that the euro crisis could have the potential to destroy the 27-nation European Union.

The euro's lack of a correction mechanism or of a provision for countries to leave it could be a fatal weakness, he said Tuesday.

Germany had imposed its criteria on how a 750 billion euro ($1 trillion) euro zone rescue mechanism should be used and was imposing its own standards — a trade surplus and a high savings rate — on the rest of Europe, Soros said. (more)

Simmons Says Nuclear Device Only Option to Stop Oil Flow

Bob Chapman:The Fed's Purchase of US Sovereign Debt: "The US Treasury is under the Control of the Fed’s Owners"

US, UK and European financial systems are on the way to collapse

Were it not for the Federal Reserves purchase of Treasury and Agency bonds the US would already be unable to raise funds to service debt and issue new debt, and it would already have descended into national bankruptcy. It is no wonder the Fed does not want to be audited. Through various artifices the Fed has been purchasing US treasury paper. No one knows how much, because when asked the Fed says it is a state secret. That is what all Americans love. A country run in secrecy. A privately owned corporation operating under the cover of secrecy, and protected by a Treasury Department, that is under the control of the Fed’s owners. How is that for an incestuous relationship?

Government is desperately searching for more revenue to cover its massive deficit spending and to service existing mandatory programs. Taxes are being increased; some 19 new taxes, in the recently passed medical reform legislation. Unfortunately this isn’t enough. Of course, there is never enough. (more)

Two Consequences of the Stimulus Programs Washington Wants You to Ignore!

Over the past two years, we’ve seen the largest stimulus policies the world has ever produced.

As a result, sovereign debt and central banks’ balance sheet holdings have gone through the roof!

A glance at the monetary base chart below shows how extraordinary these policy measures have been in the U.S. (more)

Fannie Mae Proposes Bulldozing U.S. Homes

As the collapse of the U.S. housing sector worsened in 2008, and the precise nature of this supply-driven bubble became apparent, I laid out a very specific “blueprint” for putting a genuine “bottom” in this market.

The U.S. government needed to commit $1 - $2 trillion paying-down the mortgage balances of U.S. homeowners, in order to restore some badly-needed equity for these homeowners, which in turn, would provide some stability to the U.S. housing market – by eliminating most/all “underwater” mortgages, and thus ending the incentive to “walk away” from these mortgages.

By 2009, with the U.S. government having done nothing to mitigate this collapse and U.S. homeowners having lost much more equity, I raised the necessary government ante to $3 trillion: enough to pay-down mortgage balances by roughly 20% (only a small fraction of the $10 trillion used to bail-out Wall Street). But there was a second structural problem in the U.S. housing market which I identified: a supply-glut which could only be “fixed” by bulldozing vast numbers of homes. (more)