Bailout Nation

During the wall to wall Inauguration coverage of Barack Obama there was a “man in the street” segment on one of the networks where people were being asked “What should the new President do about the troubled economy?” One man said “He should give money to all the homeowners who are in trouble and give some money to other homeowners too.” The idea of bailing out anyone and everyone is now in the vernacular of American society. How do you suppose people are getting the idea that everyone should get a financial rescue? Could it be story after story in the news everyday about how Citigroup, Bank of America or a variety of other banks are getting hundreds of billions of dollars in cash and government backing to keep them afloat? Maybe it’s the 200 billion given to AIG to keep it from causing systemic failure. It just couldn’t be the nearly 18 billion given to GM and Chrysler to keep them in business. Bailout fever is spreading like California wildfires. The list of businesses and industries in need of a lifeline are like the sand on a so-cal beach. Home builders, airlines, insurance companies, money market funds, states (41 are in financial trouble) and hundreds of cities around the nation are facing big budget shortfalls. Is that going to turn into some sort of bailout too? Governors from around the country are asking the Federal government for a trillion dollars so they’ll not have to make some very hard choices.

 

With all this bailout talk, another word is starting to make it into the vernacular…Inflation!!! Before the Geithner confirmation hearing, former Fed Chief Paul Volcker, who some call “the Real Maestro,” gave a short testimony to vouch for tax dodging “Turbo” Tim Geithner. (He used Turbo Tax to do his returns.) The most newsworthy thing said were the few lines Volcker slipped in about his concern about inflation because of all the bailout money being created for the banks. No news organization reported that little tidbit. Volcker’s fear of inflation should have been the real headline for the hearing because “Turbo” Tim was already a lock for Treasury Secretary. Later that night on Bloomberg Television, former SEC Chairman Harvey Pitt said he saw “no way” that there is not going to be inflation given the massive amount of money that will be spent for bailouts and economic stimulus. You won’t see that sound bite anywhere in the news either. Inflation was so feared by the founding fathers they wrote in the constitution that money shall be of “Gold and Silver.” We are a long way from the founding fathers and their kind of thinking. Today the government can print money until it runs out of trees, but what most people do not realize is there is an after effect for that kind of financial engineering. America has swept aside any talk of moral hazard and is embracing the toxic idea of a “bailout nation” for which the consequences risk our very survival as an independent country.

 

By the way, in that so-called “economic stimulus” plan forced through Congress – buried on page 147 of the bill, is a provision for $335 million for the prevention of sexually transmitted diseases. Yup – that ought to do the trick to get this economy moving again – I wonder how many jobs this will help create (maybe in the condom industry). Seriously – where do these bozos who write this sort of legislation come from? They must have been escapees from Area 51 where aliens altered their brains and turned them into unthinking idiots. Maybe there is life on Mars and it has impregnated the brains of some politicians and turned them loose on the earthlings to destroy us all and take over the planet??

Photoshow from around the Globe

Here are interesting photos of the growing car stocks from around the world.  By the way, there are some pretty good deals to be had on new cars right now.  To view more click here.

Buy Gold Now, More House Later

The Case Schiller Home Index came out today and demonstrated that housing prices continue to fall.  All twenty metro areas in the country saw home prices drop with eight of them posting their largest monthly decline on record.  The one-year drop in home prices were steepest in Las Vegas, down 31.6%, Phoenix 32.9% and San Francisco 30.8%.  For these reasons, many think now is a good time to buy real estate.  Don’t be fooled, it’s still early in the game.

 

The problems in the housing sector are far from over.  This may be good or bad news depending if you’re a home owner or renter.  Housing values will continue to fall.  In addition, over the first three weeks of January, retail sales were down 2.6% versus December.  This again demonstrates that the consumer remains stressed and unable to or unwilling to spend.  When people are losing jobs, they don’t go out and buy things they don’t need.  Just yesterday, approximately 76,000 jobs were lost due to lay-offs from the likes of Home Depot, Caterpillar, Microsoft, and many others.  As long as employment declines, the economy will remain stressed and the Fed will be forced to inflate. 

 

This is turning into a cycle that would be home seekers can use to their advantage.  As the economy comes under more pressure so will home prices.  The Fed will continue to create inflation to battle against this.  Inflation is good for gold.  Gold will increase in this environment.  So, gold will appreciate while housing depreciates.  The lesson is:

 

Buy gold now so you can buy more house later.

The Money Trail

Gold Soars

Gold is rallying in all currencies.  In many currencies it is setting new all time record highs.  Looking at gold in terms of British pounds, Euros, Australian and Canadian dollars, New Zealand currency and even the Russian Ruble, gold is at all time highs.  It is likewise showing excellent performance in terms of the U.S. dollar.  This is suggestive that all currencies are devaluing against honest money, gold.

 

Analysts are saying investment demand is clearly underpinning gold.  Flows into ETF’s and demand for physical gold are extraordinary.  The most important thing is that gold is moving into strong hands.  When people acquire physical gold, their intention is to hold it for the long term.  Gold is being acquired as a store of value and an asset that can protect against rising inflation that is anticipated to result from the massive economic stimulus that is being poured into the U.S. and other economies.

 

There are grave concerns that in Great Britain the banks will all have to be nationalized.  As a result, the British pound has literally tanked.  There are also questions about the credit worthiness of a number of countries.  The credit ratings of Portugal, Spain, Ireland and Greece have all been downgraded.  Some expect the credit rating of Great Britain to be downgraded soon.  Russia devalued the ruble again.  Are these countries credit worthy?  Not if their economies continue to collapse and their banking system falters.

 

These are all substantial reasons to own gold as an insurance asset and to protect against further currency depreciation.  Perhaps one of the best features of the gold market is that it still appears to be early in a bull market cycle.  The potential for extraordinary gains remains very real.  You have Merrill Lynch, Citibank, the Barron’s Round Table analysts, Barron’s editors and many others forecasting gold will rise substantially from today’s levels.  If these analysts evaluation of the market and the future trends are correct, the potential on the upside for gold is outstanding.

Isaiah 3 Reference

Isaiah 3:4 was referenced in my last post.  Isaiah 3 reveals God’s judgment leveled particularly against Israel.  Although it has applications to other surrounding nations, the interpretation is definitely towards Israel.  You’ll find God’s judgment against Israel more severe and intense than against any other nation.  Why?  Israel was God’s chosen land and enjoyed a particularly close relationship to God.  With privilege comes responsibility.  You can apply this to us today. The United States has been more privileged than any other contemporary nation, and we will be judged accordingly. 

 

“And I will make boys their princes, and infants shall rule over them.” Isaiah 3:4

 

As far as ability is concerned, men in high positions today should be wearing diapers.  Our rulers are juvenile adults and they are totally incompetent.  This is exactly what brought Israel down to ruin in that day and is exactly what is bringing us down now.  God was their final judge and He is our judge now.

Tarnished

The British Pound continues its horrid decline falling to a 23 year low against the US Dollar as events in Britain are rapidly spiraling out of control.  Considering the once mighty British Pound, also called the Sterling because it was at one time as good as silver, and was the global reserve currency when Britannia ruled the seas, this reality is depressing.  

 

Right now their government’s plan to rescue the banks there is being met with skepticism by investors while a genuine, and I might add, well-founded, fear of just who it is that is supposedly going to buy all this debt that the government is issuing which is blowing their fiscal budget deficit to kingdom come.  We have the combination of a government spending itself into the abyss while its stagnating economy produces fewer tax receipts.  Sound familiar?  This point has not been lost on gold which once again today made yet another all time record high in terms of Sterling.

 

One has to look at what is happening to the Pound with a great deal of sadness.  Its decline, which is completely due to its reckless political leaders who like ours here cannot seem to restrain spending their citizenry’s money and that of those not yet even born, is a frightening harbinger of what greets the US Dollar should we continue on our current course.  From what I can see regarding the new Administration’s policies, coupled with a Congress completely taken over by those who are salivating at spending upwards of another $1 trillion, the US Dollar is doomed to follow the same course as the Sterling.  

 

To say that it was inevitable is to allow those responsible to escape the blame.  All of it was completely avoidable, but it would have required statesmen who had the long term interests of the nation’s monetary future in mind rather than gutless politicians who lacked the courage to do what was right for the LONG TERM, even if it cost them their seats in the halls of power because of the hardship that it would inflict in the SHORT TERM.

“And I will make boys their princes, and infants shall rule over them.” Isaiah 3:4

Ron Paul on Banks and Standing Armies

Glen Beck actually quotes Thomas Jefferson on the fact that “banking establishments are more dangerous than standing armies.”

Backward Economics

Washington, D.C.–“Barack Obama claims that Americans can only stave off economic disaster by trillions in government spending–which means trillions of dollars taxed or borrowed to finance government make-work programs,” said Yaron Brook, executive director of the Ayn Rand Center for Individual Rights.

 

“Obama-nomics couldn’t be more wrong.”

 

“Prosperity requires that the government drastically cut government spending.  That way, as much real capital as possible will remain in private hands, and be put to productive use by entrepreneurs to create valuable goods and services to sell at home and abroad.  By taxing and inflating our wealth away, Obama will simply be creating more of the crushing debt that brought about the current crisis.”

 

“You don’t put out a fire with more gasoline. And you don’t end a recession by destroying capital.”  

Extra Extra – Read All About It

Here is a sample of headlines from around the globe.  I can send links upon request.

 

JPMorgan Chief Says 2009 Will Be Bleak

The US financial and economic crisis will worsen this year as hard-hit consumers default on credit cards and other loans, Jamie Dimon, chief executive of JPMorgan Chase, has predicted in an interview with the Financial Times.

 

New Car Buyers to get Government-Assisted Credit

Finance companies with links to the car industry may be given access to the Bank of England’s multibillion-pound liquidity scheme so they can offer credit to buyers.

 

Economic Crisis Stops Work on Dubai Skyscraper

WORK on what was to have been the world’s tallest building has been halted for at least a year, as the financial crisis makes itself felt in Dubai.

 

China Bails Out Steelmakers and Car Industry

The Chinese government has announced a rescue package for its car makers and its steel industry in order to revive the faltering powerhouses of its economy.

 

Banks in Need of Even More Bailout Money

WASHINGTON — Even before word came on Tuesday that Citigroup might split into pieces to shore up its finances, an unpleasant message was moving through Congress and President-elect Barack Obama’s transition team: the banks need more taxpayer money.

 

Ruble Devalued to Six-Year Low as Gas Dispute Deters Investors

(Bloomberg) — The ruble fell to lowest in six years against the dollar after the central bank devalued the currency for the third time in four days and the government’s dispute with Ukraine over gas shipments remained unresolved.

From a Dark Continent to a Darker World

The last few weeks I was in Africa, the Dark Continent, Uganda to be exact.  Sorry to those of you who were left in the dark about this.  Africa received the Dark Continent label as little used to be known about the continent’s interior geography, so map-makers would simply leave this region dark. 

 

While there I had no access to any form of media.  No TV, newspapers, internet, nothing.  It was nice to be completely removed from western society.  The simplicity of the African lifestyle is enviable. 

 

Surprise, Surprise, that when I returned to civilization, things were no different, but worse from when I left them.  Politicians are still clueless or are outright lying to us about the cause of and solution for our current financial catastrophe.  Wars also seemed to have permeated even more throughout the Middle East.  I’d say the Dark Continent is looking pretty bright right now…