Thursday, August 20, 2009

Market Stages Quiet Comeback

Wallstreet Journal Europe August 20 2009

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The Countdown To The Implosion Of The Dollar

You can take your waves, percentages, algorithms, quants and quarks and throw them directly into the basket. The time for lines and squiggles are behind us. The common shares of the US dollar are and have been in a long term downtrend. That downtrend is 81 days from implosion. The selling of the US dollar and US dollar instruments is increasing in international markets, making it ever more difficult to manipulate the popular US dollar index, the USDX.

The price of gold is all in the dollar, times 100.

The manipulators have built a fundamental spring into gold by their capping activities.

COT has cooked its own goose.

Where the price of gold is concerned, there is no other focus of interest as all points of interest have but one common denominator.

That entity is the US dollar. (more)

McAlvany Weekly Commentary August 19, 2009

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Peter Schiff: Hyperinflation Risk High, Stocks Will Crater

Euro-Pacific Capital President Peter Schiff that the U.S. could see double-digit inflation within the next two to three years, and potential Zimbabwe style hyperinflation within the next five to 10 years, “depending on how the government reacts to high inflation.”

In the period from October 2008 through May 2009 the Federal Reserve doubled the monetary base, in part to help increase money supply to provide for all of the new government programs, including TARP, TALF, and the Obama and Bush stimulus packages.

According to Schiff, government stimulus is the problem, not the solution. (more)

Buffett: U.S. Could Become Banana Republic

Warren Buffett says the growing mountain of U.S. debt could turn the country into a banana republic.

“Unchecked carbon emissions will likely cause icebergs to melt,” Buffett writes in The New York Times.

“Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.”

The U.S. economy appears to be on a slow path to recovery, Buffett notes, but “enormous dosages of monetary medicine continue to be administered,” creating an annual deficit more than twice any since 1920 aside from war-impacted years of 1942-1946. (more)

Time to get real By The Mogambo Guru

Bloomberg had the story about how "The global financial crisis
has blown a hole in the 'efficient markets' theory on which modern economics
and modern finance have been based, said Richard Thaler, a professor of economics and behavioral science at the University of Chicago ... he said the theory assumes that everyone in the economy behaves rationally, which is like leaving friction out of account when doing physics. It consists of two assertions: that asset prices are right, in the sense that they fully reflect available information and thus provide accurate signals for allocation resources; and that market prices are impossible to predict, Thaler said."

Oddly enough, this comes at the same time a doofus named Robert Lucas at the University of Chicago whines in The Economist magazine that in a previous issue the magazine was.. (more)

Happy days Are Hear Again

34 Million Americans Receiving Food Stamps

There is something troubling when the theme of recovery is never tied to U.S employment. The American worker is suffering. This has not changed. The solace being offered is that less people are being fired. I suppose the 26 million American workers who are unemployed or underemployed might find some comfort in the jobless recovery talk. Yet this recession is making it particularly hard for people to find work. That is why we are seeing a spike in bankruptcy rates that rival those of 2005 when people rushed to file before more stringent guidelines were imposed. Even with the banking friendly rules, you can only squeeze so much out of someone who has nothing left.

If you want to see the actual pain for those at the lowest rung of the economic ladder, all you need to do is look at the massive spike in people receiving food stamps: (more)