Saturday, November 27, 2010
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Why low interest rates do not help the housing market and heavily benefit investment banks – 40 percent of Americans have mortgage rates higher than 6
The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote.
Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending, compared with 27 percent in 1975, she explained.
"Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity," Bair wrote. "Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources." (more)
Up until recently, the idea of a world currency was absolutely unthinkable for most people. In fact, the notion that all of the major nations around the globe would agree to a single currency still seems far-fetched to most analysts. However, if enough "chaos" is produced by a concurrent collapse of the U.S. dollar and the euro, would that be enough to get the major powers around the world to agree to a new financial world order? (more)
Earlier this month, I offended a number of readers with a column suggesting that if you want to see rapacious income inequality, you no longer need to visit a banana republic. You can just look around.
My point was that the wealthiest plutocrats now actually control a greater share of the pie in the United States than in historically unstable countries like Nicaragua, Venezuela and Guyana. But readers protested that this was glib and unfair, and after reviewing the evidence I regretfully confess that they have a point.
That’s right: I may have wronged the banana republics.
You see, some Latin Americans were indignant at what they saw as an invidious and hurtful comparison. The truth is that Latin America has matured and become more equal in recent decades, even as the distribution in the United States has become steadily more unequal. (more)
Ben Bernanke’s seemingly endless money printing campaign may indeed spell doom for dollar holders in the long run. In fact, some investors are convinced the dollar is going the way of the do-do bird.
Famous investors Jim Rogers, Marc Faber, and Peter Schiff think the dollar is eventually headed down the economic toilet.
Judging by recent currency trading action, they may be right…
U.S fiscal uncertainty put the greenback under pressure for most of the summer. The U.S. Dollar Index has been sliding steadily from June all the way through early November.
But that’s just part of the story…
The falling dollar has pushed commodity prices skyward. Precious metals are surging and oil was pushing $90 not long ago. Since the dollar is the reserve currency, nearly everything priced in it has seen quite a jump.
Given all the negative news, one would think a dollar collapse is imminent. Such a scenario would send the price of nearly everything into the stratosphere in a matter of weeks. (more)
China, where the world’s four biggest agricultural contracts are traded, will raise costs to buy and sell farm-product and metals futures as part of a government effort to limit speculation and tame inflation.
The Dalian Commodity Exchange said today it will scrap a measure that lets some investors pay half the normal fees for contracts bought and sold on the same day and will cease all other discounts as of Jan. 1. The Zhengzhou Commodity Exchange and Shanghai Futures Exchange said they will extend fees now levied on some contracts to other products.
The government has pledged to use price controls and may raise interest rates a second time this year to slow inflation that rose last month to a two-year high and to curb food costs that jumped 10.1 percent in October. Chicago-based CME Group Inc. and other U.S. and European commodity exchanges also are charging more to trade some raw materials after prices jumped.
“Raising fees to be active on the exchange is a predictable move to try to calm down speculative investment,” said Gary Mead, an analyst at VM Group in London. “But high futures prices reflect both speculative investment and fundamental supply-demand factors.” (more)