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Showing posts from January, 2010

Do we have a Master Class?

Stewart Dougherty argues that we do. Not only that, he has grounds for believing they are putting the rest of us out of business.
Recent American events paint an ominous picture of a Master Class that is now in total control.

When 90% of the American people vehemently rejected the $700,000,000,000.00 ($700 billion) TARP bailout plan, the Master Class put it on a fast track and approved it anyway.

When a clear majority of the American people said no to a government takeover of Chrysler and GM, the Master Class poured billions of taxpayer dollars into those corporate sinkholes and took them over anyway.

When the people said no to multi-trillion dollar crony bailouts for the bankers and insurers whose corruption had caused global financial mayhem, the government pledged to those elite insiders more than $13,000,000,000,000.00 ($13 trillion) of the people’s money anyway.

When the people expressed astonishment and anger that Wall Street planned to pay itself record 2009 bonuses, in the midst o…

Government stimulus failure

If the government was a doctor and you went to it with a broken arm, it would break the arm again then boast about all the good your medical spending will do for the economy.

In the case of the housing bubble, after it broke the government set about doing everything in its power to bring it back. "Rather than allow prices to fall so that the housing market returns to a sustainable level," Ron Paul writes, "the government does everything in its power to try to keep housing prices elevated."

Did underconsumption burst the housing bubble? No. The collapse was caused by "a malinvestment of resources into sectors of the economy that were unsustainable without easy credit. The rise in housing prices was not, in fact, indicative of the new normal but rather an indicator that something was seriously wrong."

Pursuing the same flawed policies in double-time will only hasten the empire's downfall. And when that happens, blame will be laid squarely on the fre…

Ben Bernanke's bubble blindness

Bernanke began denying the existence of a housing bubble at least as early as July, 2005. If he understood what caused bubbles he might have had a better understanding of what was happening. But he thinks an abundance of paper money can cure any economic problem that arises, so he's never too concerned about bubbles.

This YouTube video shows Bernanke and his paper factory in full denial.

Is that gold bar for real?

In a recent article, Doug Hornig, Senior Editor of Casey's Gold and Resource Report, discusses counterfeit gold coins and bars.

Gold is one of the heaviest metals, but also one of the softest. The old Wild West method of biting down on a gold coin to see if it is real is actually a pretty good test. "If you chomp down and shatter a tooth, it ain’t gold."

There's not enough of a profit margin for scam artists to bother counterfeiting bullion coins, Hornig says, but gold bars are a different story.
Fakes do show up in the market from time to time, and they’re hard to identify. Generally speaking, counterfeiters don’t bother with the smaller ones, which are stamped, numbered, and sealed. They concentrate on 1-kilogram or larger sizes. These are poured, rather than stamped, and can be easily adulterated or even hollowed out and filled with some other, cheaper metal.Hornig offers some guidelines:
For coins, avoid “commemoratives.” Stick with universally recognized governme…

Eyes of Fire for Kindle

Ron Paul on government's investigation of the crisis

Dr. Paul writes:
Last week, the Financial Crisis Inquiry Commission kicked off their first round of hearings on the causes of the economic meltdown on Wall Street. The commission is being compared to the the Pecora Commission launched in 1932 to investigate the causes of the Great Depression. The Pecora commission is beloved by those who believe the solution to every problem is more laws because it was used to justify a number of new laws, including Glass-Steagall. Of course, none of those laws addressed the real causes of the Great Depression. . . .

The Pecora Commission was stacked with big government sympathizers who blamed the free market and the gold standard without question, and without any consideration of government interference in the economy. This panel is no different. Never will they contemplate how government steered us into this crisis, and what perverse incentives can be removed or repealed so that the market will function more smoothly. Never will they discuss how…

Another crash on the way

Doug Casey comments on what governments have done to "save" us and what it means.
Everyone was afraid the world was going to come to an end a year ago, and it almost did. But governments all around the world stepped in and printed up trillions of their various currency units – it's not just the United States. And still, retail price inflation hasn't blossomed. It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem. It stems from an economic version of the theory that all we need to fear is fear itself. As long as we have the right psychology, everything is going to be okay – total nonsense.

It's the Wile E. Coyote theory of economics. As long as you never look down after running off a cliff chasing the roadrunner, you can keep treading air. Unfortunately, although the power of positive thinking may help in many ways, it's of zero use if you continue living above your mean…

Government debt-holders

On LRC today, Bill Sardi published a chart and explanatory comments taken from CNBC about the ownership of the federal government's debt. Here's the breakdown:
Federal Reserve + intra-governmental holdings $4.785 TRILLION
Mutual funds $769.1 billion
China (additional $99.8 billion from Hong Kong) $776.4 billion
Japan $711.8 billion
Other investors $629.7 billion
State and local governments $516.9–$550.3 billion
Pension funds $456.4 billion
United Kingdom $214 billion
Oil exporters $191 billion