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)

Wallstreet Journal Europe August 19 2009

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US Stocks Finish Higher

U.S. stocks closed higher Wednesday as declining oil inventories sparked Exxon Mobil, Chevron and other energy companies higher, and Merck led health care into the green although industrials including Deere dented the market's gains.

For the second day this week, big declines in China hampered stocks at the open Wednesday. However, that weakness was erased after the U.S. Department of Energy said U.S. crude-oil inventories plunged unexpectedly last week. This decline fueled a broad sector bounce for energy companies that lasted into the close.

Overall, the Dow Jones Industrial Average ended up 61.22 points, or 0.66%, to 9279.16, marking its second-straight day finishing higher. Pacing the index, Exxon Mobil gained 1.51, or 2.3%, to 68, and Chevron tacked on 1.22, or 1.8%, to 68.16. (more)