The U.S. Account Balance?

March 25, 2008 at 1:01 pm (Housing, National Debt)

I thought this was pretty funny.  It’s taken from the official CIA government website.  It’s a snapshot of each country’s current “account balance.”  Of course, this is just one puzzle piece of the picture, but imagine each country as a person, and each person having a bank account.  This is how much each country has in the bank.  Anyone want to guess where the U.S. is on that list?  Probably above Rwanda and Zimbabwe, but below Switzerland, right?

Wrong.  We’re dead last with the largest negative balance.  (“We may be losing money on our product, but we’ll make it up in volume.”)  China is on top, of course.  Now, how that account is divided up according to currencies, commodities, etc, makes a huge difference on its actual value, so this snapshot is just something funny to look at.  Also, all the things not captured on this, such as natural resources, account balances of citizens, etc, paint a different picture.  But, ultimately, it’s pretty hilarious.

In other news, there will likely end up being a housing bailout for homeowners here.  As far as I’m concerned, the government shouldn’t be bailing anyone out, but if they’re going to do it for big business, the government might as well bail out individuals too.

Heck, they’ll have to, seeing as they’re taking the burden of the worthless mortgages Bear Stearns and other banks had as “assets,” and guaranteeing the banks full price for them.  Pretty soon, the government will be holding millions of mortgages and doing whatever they can to prevent widespread default.  Pretty slick how the big banks got to reap profits and then hand off the risk. 

A lot of people are calling this the bottom of the bear market, but that’s just being silly.

Today’s article of doom: Peaceful Tibetan Protesters Beat and Threatened with Death — In America

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Silver, Gold, Copper, Wheat, Corn, Soybeans… Down

March 20, 2008 at 3:05 pm (Silver)

Ka-pow!  Commodities (real things you’d want to own in times of need) took another hit today.  Many people speculate why.  It’s strange how there is already a tendency to think we’re on the path of economic recovery.  Actually, I’d like to hope so because that would mean my house would stop dropping in value and almost anything I bought in the stock market would go up in value.  Not to mention prices would drop. 

But that’s just not the case.  Nothing has changed for the better.  All that happened was the Federal Reserve did some sleight-of-hand tricks.  That’s it, and that’s all.  But we have people saying things like “The dollar is strong. The other commodities are weak. That is putting downward pressure on gold.”  Strong?  I beg to differ.  How can the dollar go from weak to strong in a matter of days?  It’s barely moved.  Just because the dollar has temporarily stopped falling at freefall speed doesn’t make it strong.  It still takes $1.55 to buy one euro, and the euro is declining in strength too.

We’re not out of the clear yet.  We still live in recession land, with the wind blowing away our tent stakes and the rainclouds gathering above.  And all the wildlife has scampered off.  That’s why all these commodities will have to spring up again sometime next week (they’re closed here in the US tomorrow).  I’m not an economic know-it-all, and I would never give any advice to buy anything, but if I had any cash lying around, I would definitely snap up some silver since it’s dipped under $17 (if you can find it).  Or buy up some AMEX shares of iShares Silver Trust (SLV).  If you look at the drop in all commodities the only rational explanation is that people are so short in other investments, they have to keep throwing good money after bad.  At least, that’s what this person and this person seem to think.  Here are some other articles that are bullish on silver.

Today’s article of doom: Robotic soldier dog.

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Nevermind, it’s all okay!

March 18, 2008 at 3:34 pm (Inflation)

worthless rubles Well, disaster averted.  See this worthless pile of rubles to the left?  That’s not gonna be us.  I was getting worried for a minute, since all fiat currencies end up dead in the end.  But, all is well with the markets and our economy.  Everything’s gonna be all right now — housing prices will return to their peaks, stocks will recover, commodities will drop to reasonable prices, and the dollar will soar once again.   401Ks will stop bleeding assets, the banks will act responsibly, and employment will improve.  The fundamentals are all in place.

Not.

Seriously, I don’t pretend to know the back room deals going on constantly, or how the shell game of the $500 trillion (yes, trillion) worth of derivatives actually works, or what kind of coordination the world’s central banks have.  But I do know there is no reason for the elation the stock market has shown the last couple of days, and especially with financial stocks today.  And there is no good reason commodities have dropped so much, unless it was due to a bunch of people having to sell their losing positions to fund margin calls.

While Wall Street seems to be slapping each other on the back and saying, “Whew, that was a close one,” everyone with common sense should be freaked out the Federal Reserve had their first emergency weekend session since 1979 because they couldn’t even wait two days to intervene with their scheduled and expected cut, fearing a market crash on Monday.

I even saw an article today whose title was something like “Fed only cuts rates by 0.75% — bad news for gold.”  Um…. what?  I don’t get it.  I just simply don’t understand.  It seems I can no longer find this article, so maybe the author wised up and modified the title.

Oh well, the next few days will force a showing of cards.  The camel can withstand just a few more straws.  After Bear Stearns dropped in worth from $80 to $5 per share this month, Lehman Brothers was rumored to be next on the chopping block due to the way in which it is similarly leveraged.  But hey, some good cashflow results and all is normal!  The stock climbed over 40% today.  Well, that’s understandable, since we all know reporting is completely accurate, and when a CEO says liquidity is not a problem, that person must be telling the truth.

Today’s article of doom: For everyone who cringes at the phrase New World Order.

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Economic Crash has a Bright Side

March 14, 2008 at 4:17 pm (Individualism)

I read a great article yesterday.  A paranoiac’s article; someone even more doom-mongering than myself.  And an article that will likely prove to me mostly true.  However, all is not bleak with the impending depression.  There will be a lot of great things that come out of it.

Many will give up cars entirely, moving to small towns or, villages growing gardens and walking to all needs. Bikes, walking, motorcycles, and horses become the newer method of transportation for many. Several will grow to like it as health-exercise improves and stress melts away. Lower expectations shall serve many well. Those unable to adjust or, change jump-off buildings, go nuts or, cope badly.

Will there be a total departure from our modern way of life. No, but societies including America will see changes. Energy conservation becomes a religion and wastefulness of all kinds shall disappear. Smart people see these things coming and shall quietly and unobtrusively prepare. Low key is best while flash, dash and rah-rah materialism turns passé.

Here’s the complete article.  An economic collapse might be just what the doctor ordered.  We’ll become more capable and independent as we trade entertainment for knowledge and junk for goods.  We’ll become better resource stewards as waste shrinks dramatically.  We’ll probably become more in tune with our local community as we realize the government doesn’t have the ability to look out for us.  On the whole, it’ll be the greatest “reality show” to date.

Today’s article of doom: watching the dollar die.

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Save the poor wealthy investment banks!

March 14, 2008 at 9:02 am (Inflation)

To follow up on the last post, here are some articles surmising why the recent $280 billion Fed bailout was geared towards keeping a large investment bank from going belly up.

Ultimately, the Fed has its reasons to bail out an institution that makes its profits by speculation and enriching the already rich, by indirect collection and fleecing of the rest of us underlings, but I guarantee its reasons have nothing to do with the prosperity of you or me. Arguably, an investment bank is one of the most parasitic of all businesses, and yet it’s first in line to get a bailout by the Fed with your tax dollars and mine. Why? Why should any businesses be bailed out, much less ones that don’t create useful things, such as food or energy?

Bush chimed in with, “It was a strong action by the Fed and they did so because some financial institutions that borrowed money to buy securities in the housing industry must now repair their balance sheets before they can make further loans.” Uh….? Poor bank can’t make loans, so sad. They were teetering on the brink of collapse due to poor management or greed or whatever, and instead of letting Capitalism work, the Fed just decided to use our money to give them a free ride. I don’t care if they can make more loans. Too bad if they collapse. Good riddance, bye!

Here is a great video where Jim Rogers says simply the Federal Reserve should be abolished. He’s got common sense answers to common sense questions but of course everyone smirks when he says the obvious. Buckle up, this is going to be a strange ride.

Today’s article of doom: “You have to go back to the banking crisis of the Great Depression to find a moment when the financial system as a whole seemed so close to the precipice.”

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Fed dillutes money some more

March 11, 2008 at 12:32 pm (Inflation)

It’s a simple concept, but somehow it still isn’t understood by most people.  Dollar bills are a good, just like Crunchberries are a good.  If it rained Crunchberries from the sky every day at 11:03 AM, no one would ever be able to sell Crunchberries and stores would stop carrying it.  In other words, the more Crunchberries there are, the less each Crunchberry is worth.  Supply and demand.

So it is with dollars.  The more total dollars there are, the less your dollars are worth.  So, when the Fed announces it’s going to further dillute your dollars by printing up 200 billion more, it’s bad news, not good news.

But the media can spin things in 180 degrees of course.  This will increase liquidity!  Banks can now make more loans!  Great!  So, let’s see… banks who deserve to take a loss for their shady loan practices instead get bailed out by the government.  And corporations that have mega-assets will continue to make a return on their investments, and the only catch is that those with modest means foolish enough to have saved money in a bank account will note their dollar doesn’t go so far this year.

What a relief the Federal Reserve acted!  Way to go!  I was afraid Wall Street wasn’t going to continue making obscene profits at the expense of the little people, but that fear is allayed.  This graph from ShadowStats.com shows the rate at which the Fed has been printing up money lately, just in case you’re wondering why everything you buy is so expensive:

sgs-m3.gif

Hey, I have an idea.  Since we have a 10 trillion dollar deficit, let’s just print up 10 trillion dollars to cover it, and then we’ll have paid off our debt at no cost!

Today’s article of doom: people starting to walk away from mortgages in droves.

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TV News Segment that is Accurate? Wow.

March 5, 2008 at 11:03 am (Inflation)

Wow, the story sure is coming out quickly.  I would have thought it would take at least another 3 to 6 months of denial from the media, followed by 6 months to a year of denial from the officials, but the media has picked up on it much quicker.  Maybe this shouldn’t surprise me — perhaps doom is being preached on all major TV channels now.  I haven’t watched television in years, so I’m out of the loop.  I read my news online from less traditional sources, so I admit to being out of touch with what the traditional sources are saying.

They’re outright mocking Bernanke!  I just can’t get over my amazement.  And they even have the ShadowStats guy on, saying to buy gold.  All right, finally some accuracy.  It’s definitely time to hitch up your belts, folks.  This is going to be a long ride.  I just spent my entire tax return on silver two days ago, even though it’s nearly 5 times as expensive as the last time I bought silver in 2003.  And it’s already gone up by about 8%.  And that rebate check to stimulate the economy?  It’s going straight to the local precious metals trader.   

Today’s article of doom: Island of trash in the Pacific twice the size of Texas.

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Oil’s Higher than Ever — Even Considering Inflation

March 3, 2008 at 10:14 am (Oil)

Oil’s current price is even higher, in official inflation-adjusted terms, than it was during the Middle East crisis in 1979 – 1980.  Now, of course, I don’t believe the official inflation numbers, but regardless, this is an important milestone.  Especially considering there are three pain points; Iraq and Iran, Venezuela and Colombia, and Russia and Ukraine. 

In addition to the fact that oil being pegged to the ever-decreasing dollar is important for America’s perception and power influence, oil is the most important commodity.  If you took all of the companies that trade on the New York Stock Exchange and American Stock Exchange and added up their value, you’d find that roughly half of all the value was from companies that either pumped oil, processed oil, refined oil, transported oil, made energy or products from oil, or made products that consumed oil.

So, the price of oil is very important.  And, of course, this is why every battle we get in happens to be in an area key to oil distribution.  It’s our lifeblood.  If  you’re the former chairman of the Federal Reserve, you get to say that and not be vilified.

 Today’s article of doom: Bernanke urges banks to forgive portions of mortgages.

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