Apparently, the Chinese curse worked. We are living in “interesting times.”
Congress is currently putting together a play that will, depending on whose view you take, save the economy of the U.S. (and so the world) from certain destruction, or simply create a financial autocrat in Henry Paulson. The latter view is particularly troubling, since the same Henry Paulson is the bureaucrat under whose leadership as Treasury Secretary we arrived in this mess. He is the former head of Goldman Sachs, raising serious concerns about how appropriately he’ll treat his former employer through this mess (the phrase “sweetheart deal” is being mentioned), but more importantly, many are sure the guy whose incompetence helped get us in this mess is exactly the wrong guy to help steer us out of it.
I can’t disagree with this sentiment.
The amazing thing about all of this, is that despite government’s inability to manage important systems, like Medicare and Social Security, the American people are willing to write the biggest blank check in the history of civilization to fix everything. It simply won’t work, and represents nothing more than a bigger band-aid slapped over the collection of previous band-aids. It’s folly, and meant, in the humble opinion of your editor, to give the people who created this mess a little more time to check and adjust their golden parachutes and jump out of the burning, disintegrating airplane before it crashes.
As I write this at 5:39am on Monday, Gold is again jumping in price. One of the most disturbing sights on Thursday and Friday of last week was the strong rise in the price of the metal, even though the stock seemed to be charging back. While satisfying, since I believe that gold is the only safe harbor for saving wealth, it still made me uncomfortable to see the numbers march hand in hand with the Dow. It’s not supposed to work that way
Also disturbing is how many people don’t have a clue about what’s going on. They blindly waddle into Best Buy to buy plasma televisions and fill restaurants. They just don’t believe anything bad can happen. They are wrong. A bad thing happened over the weekend. Our economy turned down a dark, dark road bereft of road signs, or I fear, much pavement.
I am sorry to inform you that as bad as the U.S. national debt was as last Friday dawned, it is twice as bad now. The United States Government on Friday (after the markets closed) seized control of Fannie Mae and Freddie Mac, effectively writing a blank check for the mismanagement and fraudulent mortgage lending they were responsible for.
Our children and grandchildren will see an economic system choked by the debt these two massive morons created. Basically, the American taxpayer has been volunteered to make good bad loans that should never have been made, and the entities that made the loans have been protected. The sad thing is, when I say “taxpayers,” I’m not just talking about Americans who filed tax returns in 2008, I’m talking about taxpayers who haven’t even been born yet. That’s how massive and far reaching this fiasco is.
On Saturday night, my wife, 6 year old son and I entertained some friends and their two boys, 6 and 9 at our house for pizza. As we listened to the boys playing with the Wii, laughing and joking as they played Star Wars: The Complete Saga, the talk turned to the economy and I said “I believe that 20 years from now, we’ll look at last night (Friday) as the day everything changed with the economy. It’ll be seen as the beginning of the end for the dollar, the U.S. economy and our current American way of life. Mark the date.”
Though most Americans don’t comprehend what just happened, it’s a very sad day. Nothing can stop what is about to befall our economy and way of life. Prepare yourself for a dramatic change in the way we live.
It’s been a tough week for gold bugs. Though I don’t give financial advice on this blog, I invest in gold and in the stock of companies that mine the stuff, and I repeat, it’s been a tough week. No, make that a tough month.
But, it hasn’t discouraged me. The bulk of my safely stored away in the hills of West Virginia treasury was purchased when the price of an ounce of gold was in the $220 range. So, I’m not worried. Even if you purchased gold closer to the $1000 price it was in the winter, you shouldn’t worry. Jim Sinclair is predicting a $1200/ounce price soon, and a $1650/ounce mark within the next 18 months. I believe him.
That being said, there’s a lot of speculation about what’s going on right now though. Sinclair linked to this excellent article.
Makes sense to me. The rest of the world has pulled ahead of the U.S. in the “race to the economic bottom,” so naturally, all things being relative, the Dollar looks better. But never fear, gold bugs…America will catch up. It’s an election year, and more trash is being swept under the rug than can be imagined.
This from the Senior Director of Strategic Planning at the Wharton School, University of Pennsylvania, as quoted on The Cutting Edge News:
The U.S. banking system is essentially insolvent. The Treasury, Federal Reserve, FASB, and Congress are colluding to keep the American public in the dark for as long as possible. They are trying to buy time and prop up these banks so they can convince enough fools to give them more capital. They will continue to write off debt for many quarters to come. We could have a zombie banking system for a decade.
How can our government lie to us like this? Well, unfortunately, we got the government we deserved. We put a higher priority on the pre-fab faux rich McMansion lifestyle, complete with 3 car payments, 4,000 square foot estate, 52 inch plasma tvs and lavish vacations, all on a family income of $65,000, than on electing a government that wasn’t interested in doing the political groundwork necessary for making millions of these pipe dreams a temporary reality.
The next several years (or decades) will be us paying for these mistakes. I’m afraid the good times are over.
Bulls and Bears. They’re usually easy to spot on the internet. The Bulls have months-old sounding pitches for how to get rich with stocks and real estate (I’m amazed that on satellite radio, I can still hear commercials touting some guy’s course for buying and flipping houses and making boatloads of money!).
The extreme-Bears are easy to spot, too. Their websites usually have ads for survival food, retreat land and home construction, guns and ammo and radiation detectors.
Somewhere in the middle is Robert Kiyosaki, who wrote Rich Dad, Poor Dad, an excellent common-sense manual for financial security. Kiyosaki’s pessimistic about the economy right now, though:
In an earlier column, I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional.
As a bull market turns into a bear market, the new pros turn into optimists, hoping and praying the bear market will become a bull and save them. But as the market remains bearish, the optimists become pessimists, quit the profession, and return to their day jobs. This is when the real professional investors re-enter the market. That’s what’s happening now.
From an article posted July 22, 2008.
Am I optimistic for the long-term? Absolutely not. I still believe we’re due for the mother of all market crashes, and that the U.S. economy is running on borrowed time — and I do mean borrowed. I think most baby boomers are in serious financial trouble, and that oil will climb above $200 a barrel. Inflation will also increase, causing more pain for the poor and middle class.
The Fed is flooding the market with nearly a trillion dollars of liquidity, which is why I believe gold under $1,200 an ounce and silver under $30 an ounce are bargains. Gold and silver should peak and decline before 2020, completing two 20-year cycles. My exit is to sell silver around 2015. I plan to hold onto gold, income-producing real estate, oil wells, and stocks.
Most of us know the bull climbs slowly up the stairs, but the bear jumps out the window. I believe the bull is still climbing the stairs, and the bear hasn’t jumped yet. But rest assured that it will.
Interesting piece by Alex Roth of the Wall Street Journal about how half-built suburban developments strand early buyers in “post-calamity” like communities.
It’s a serious situation that will be worse before it gets better.
Money on our minds this Monday, as the White House predicts a $490 Billion budget deficit next year. Given our government’s fondness for spin and general economic incompetence, I’d say the truth is probably somewhere north of that figure, between $490 and $1 Trillion. Add in bank and FDIC bailouts that will be necessary in the next 18 months, and the larger of those two numbers is probably a lowball.
Too many people today read that news, shrug and say “Well, that’s the government. They can handle it.” What will be an even bigger story in ’09 however, is starting to sneak up on us and seep into the mainstream media. Listen to this segment of the Diane Rehm show (launches a Windows Media file) and you’ll see that dozens of states are under water budget-wise for 2009. This will mean problems with education, health care, police/fire protection, highway and infrastructure maintenance and much more. The resources we need on a daily basis will be strained.
Hopelessness infects this landscape like a miasma. Whatever young adults remain in these places are not thinking about a plausible future, only looking to complete their full array of tattoos and lose themselves in raptures of sex, methedrine, and video aggression.
And that’s the lighter bit Seriously though. Kunstler’s views ring so true, even though regularly reading him, you start to get the idea he really, really dislikes tattoos. I believe though, that Jim will one day be seen as one of many visionaries whose dark futures often hit closer to the eventual truth than most. God help us.
Finally, in the “can’t wait for the future” hit parade, George Ure at UrbanSurvival.com unhappily predicts an “October Surprise” that involves a hidden hand, false flag and an attempt to disguise (if not avoid) the Greater Depression bearing down on us right now. I remember similar predictions (not from George) about the last of the Clinton days, where an event causes the White House to declare Martial Law and cancel the elections. Looking at history though, I have to admit it would be more in character for this administration than the last to attempt something like this.
Last Plane Accounts are essential if you plan on hanging on to whatever wealth you have when things turn ugly. Biggs’ essential farm or ranch stocked to feed your family isn’t nearly as “wacko survivalist” as it once may have been. Very important.
Apparently, the Chinese curse worked. We are living in “interesting times.”
It’s been a tough week for gold bugs. Though I don’t give financial advice on this blog, I invest in gold and in the stock of companies that mine the stuff, and I repeat, it’s been a tough week. No, make that a tough month. 
This from the Senior Director of Strategic Planning at the Wharton School, University of Pennsylvania, as quoted on 
, an excellent common-sense manual for financial security. Kiyosaki’s pessimistic about the economy right now, though:
Seriously though. Kunstler’s views ring so true, even though regularly reading him, you start to get the idea he really, really dislikes tattoos. I believe though, that Jim will one day be seen as one of many visionaries whose dark futures often hit closer to the eventual truth than most. God help us.