So how far ahead are the thinkers and posters here on the PCGS forum from the National press and National leaders? I would say about two years. I have said this before, but it is worth repeating. When the things we discuss here begin to show up in the National press the problems are getting critical. So now finally National leaders and the press are finally realizing that we might have a debt problem, Ha Ha Ha.
USA TODAY Posted 8/27/2005 1:44 PM
“You owe $145,000. And the bill is rising every day. That's how much it would cost every American man, woman and child to pay the tab for the long-term promises the U.S. government has made to creditors, retirees, veterans and the poor.
And it's not even taking into account credit card bills, mortgages — all the debt we've racked up personally. Savings? The average American puts away barely $1 of every $100 earned.
Our profligate ways at home are mirrored in Washington and in the global marketplace, where as a society America spends $1.9 billion more a day on imported clothes and cars and gadgets than the entire rest of the world spends on its goods and services.
Federal Reserve Chairman Alan Greenspan criticized the nation's "hesitancy to face up to the difficult choices that will be required to resolve our looming fiscal problems."
But something has changed. More than two centuries ago, Benjamin Franklin warned: "He that goes aborrowing, goes asorrowing." Now, a laugh-til-you-cry commercial portrays a man with a beautiful home and car declaring: "I'm in debt up to my eyeballs. I can barely pay my finance charges. Somebody help me."
Add it up: current debt and deficit, promises for those big programs, pensions, veterans health care. The total comes to $43 trillion, says Walker, the nation's comptroller general, who runs the Government Accountability Office. That's where the $145,000 bill for every American, or $350,000 for every full-time worker, comes from.
The lack of fiscal discipline in the United States is undermining the value of the American dollar, thereby lowering the value of the U.S. Treasuries in foreign banks. As the dollar's value drops, other nations' willingness to keep investing cannot last, says Nouriel Roubini, an economics professor at New York University.
The future poses some frightening what-ifs:
• What if the dollar plummets? Do stocks follow? How about pensions?
• What if interest rates soar? How would all the new homeowners, who stretched to buy with adjustable and interest-only loans, cover their mortgages?
• How would consumers with record credit-card debt make their payments? Would they stop buying? Stop taking vacations? What will happen if they go bankrupt? New rules going into effect later this year make it harder on such debtors.
• How would government, which depends on the taxes of a strong economy to operate, keep all its promises?”
SO HOW WOULD YOU LIKE TO HAVE THIS GUY AS THE NEXT FED CHAIRMAN?
“Ben Bernanke, who recently left the Federal Reserve Board to serve as President Bush's top economic adviser, has argued that the problem is not with the United States. The trouble lies overseas, where people want to save rather than spend their money. The key is to encourage other countries to spend and invest more.”
With the Greenspan comments about housing this week, a lot of people are probably looking at themselves as a target as well they should. The thing that gets press is that this situation of over borrowing, under saving, irrational exhuberance, it is a newsmaker because it is such a diversion from the buying/investing/saving habits of the great generation that preceeded us...they were a frugal bunch but they saw God when the great depression descended on them.
I see the headlines and I know a bunch of folk are going the wrong way on the river of financial life but there are a lot of people that do have their heads in the game, that are saving, that have paid off/are paying off their mortgage, have a 401k that is religiously tended to and keep a little cash around, but that's not newsworthy...all is not bleak because there are a bunch of folk that are paying attention. The lessons of the great generation are not wasted on most people but there sure seem to be a lot of people in the U.S. that are not paying attention.
What does this do to coins and gold? Interesting question. Man, gold is so quiet right now, you could sneak up on it and I would bet that a fair number of folk are doing just that. Coins...becoming a crap' shoot for mid level speculators methinks from the show reports and general drumming from the forest, the frugal serious collector should make out quite well but it's not here yet, the time doesn't seem just right for these folk to come out in force. I suspect the good coins are going into collector hands that are strong and you won't see them again for another 20 years. I do know that my box of 20 won't be going anywhere and I've only got 13 coins in that box, it sure would be nice if the prices would loosen up some and there was some fresh, original, well graded, moderately priced material available...maybe it's coming, we just have to wait. For coin collector folk, it's kind of like the bankers in the housing industry...they know they are going to get some realestate back, they just have to wait.
“Obviously we need a consumption tax, and more credits for savings.”
Sunnywood
Do I ever agree with that!
Seems like the last stats I read said that 120 million Americans currently paid no Federal taxes.
I thought that the 27% Tax that some were advocating seemed high, but watching an analysis over the weekend that included S.C., Medicare, everything.
I guess gas prices would drop to $1.75 and cigarettes, beer, and whisky would be cheap.
One congressman suggested rebates to folks making less than $27,000 per year. My opinion is that this is just a way to eliminate the folks that you have just brought back into the system.
The fact is that even low-income folks are going to pay one-way or another. They can pay with a consumption tax or they can pay with an “inflation Tax” all the same thing but the consumption tax eliminates the IRS.
Sure would make the coin market interesting if all the prices went up 27% overnight.
It does seem the show reports are getting just a little soft, but the auctions seem to be strong with higher prices each quarter on better material.
The price guides are all shot as we can tell by reports from our group, and no doubt everyone could use a break.
Here is a funny observation; the dealers I generally talk to on a regular basis were very bright eyed two years ago with lots of talk and energy. Over the last couple of months they all seem to be in a daze. One dealer I spoke with yesterday trying to negotiate a deal seemed like he could hardly keep in the discussion, his thoughts faded in and out. I think many of these folks are just exhausted.
"It does seem the show reports are getting just a little soft, but the auctions seem to be strong with higher prices each quarter on better material."
Yes, that is true, kind of like real estate during the 90's crash...the good stuff kept appreciating but the mid and weaker stuff went down the hole. I suspect coins are the same way but the prices are so high right now, it wouldn't seem there is much room for speculation other than from the crackout guys. I'm hunting the high quality mid level stuff to hold and it has gotten way too pricey, probably because it is following the high end stuff and the mid/bottom feeders are hoping to score along the way. Very interesting market right now. I heard a story about a brown ike going for mid 5 figures from an old dealer buddy of mine...that's incredible.
Gold prices in London slipped to their lowest levels in 2 wks as concerns that hedge funds may sell b/c damage from Hurricane Katrina was less than originally forecast (according to the U.S. Commodities Futures Trading Commission figures show that speculators tripled their bets on rising gold prices). In London, gold dropped $1.30 to $435.60 (traded as low as $435.7)... Katrina did manage to do damage to refinery platforms (Royal Dutch Shell said its 220K barrel a day Mars platform suffered damage). Refinery damage from Katrina should cause heating oil, unleaded gas, and natural gas to rise in today's session, especially as the need to convert summer blends to winter blends intensifies. While crude oil reserves have been hit, there is talk that natural gas reserves may have reached 80%+ shutin status in the Gulf region. In London, brent crude oil jumped $1.84 to $66.71... Global thermal coal demand will exceed production this year, according to JP Morgan. Usage will increase 1.5% in 2005 to 5bln tons, beating output by 433mln tons... White sugar futures hit the highest level since 12/97 as traders speculate that higher crude oil prices will boost demand for ethanol made from sugar cane as a cheaper alternative. White sugar was up $9.50 to $311.10 a metric ton in London
So what would you all say, is what percent of most dealers business? It seems to me that a large majority of dealers could not survive on just high dollar material? Plus a great deal of the high-end stuff is now put away.
It also seems to me that the middle class even perhaps the upper middle class is getting squeezed i.e. gas, housing, food, etc. with higher prices all around.
If the buying is curtailed at the mid to lower level of the market and a severe drop occurs then does dome set in on the rest of the market.
To put this in simple talk, and in no way to be prejudice against the lady collectors, how many coins does the old man get to buy when the old lady is pointing out that the gas price is double from last year, the winter utility prices are headed through the roof, the ARM mortgage just went up $200 per month, etc.
So lets say that that the upper middle, middle, and lower ends of the market collapse, Does the gloom spread to the rest of the market?
Cohodk,
This gold and silver market will just not move above their “ control Prices” until such time as the Fed and the powers that be leave the market to market forces, or the rest of the world takes possession of so much metal that they can not play the short sell game. Anytime gold gets close to $450 they are going to hammer it, and anytime silver heads toward $8 the same thing. Oil, copper, sugar, lumber, all can go through the roof, but the most valuable of commodities are just not allowed to do that, for fear people will treat them as REAL money!
I agree with you guys on most things but I can't agree on coin prices. Yes gold and silver are world commodities that will do well with inflation but an MS67 $5 gold piece has little metal value to substantiate such a huge price and the world won't pay it. These belong to the huge number of US collectors who have heavy debt and high equity lines. When it comes to a house payment or a gold coin they will be selling these by the truckload. The bargains are 3-6 years away but I would expect most of these hi grade coins to dump 40-70%. India doesn't give a rats azz about our numismatic rarities, they want gold.
<< <i>Gold prices in London slipped to their lowest levels in 2 wks as concerns that hedge funds may sell b/c damage from Hurricane Katrina was less than originally forecast >>
A heck of a note that people were investing their money in hopes that Katrina would do more damage than it did. What a world we live in...
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
<< <i>Gold prices in London slipped to their lowest levels in 2 wks as concerns that hedge funds may sell b/c damage from Hurricane Katrina was less than originally forecast >>
A heck of a note that people were investing their money in hopes that Katrina would do more damage than it did. What a world we live in... >>
If the city is going to flood to 15' at high tide they may yet get their wish.
<< <i>Obviously we need a consumption tax, and more credits for savings.
Sunnywood >>
Why Sure! Another tax! More government! Great thinking!
>>
Well, since our current congress and administration cannot restrain spending AND vastly underestimated the cost of the mdicare prescription drug benefit, we need to do something. The US has borrowed $5000 per man woman and child since his birth in 5/02. The year prior to his birth the budget was in surplus.
This gold and silver market will just not move above their “ control Prices” until such time as the Fed and the powers that be leave the market to market forces, or the rest of the world takes possession of so much metal that they can not play the short sell game. Anytime gold gets close to $450 they are going to hammer it, and anytime silver heads toward $8 the same thing. Oil, copper, sugar, lumber, all can go through the roof, but the most valuable of commodities are just not allowed to do that, for fear people will treat them as REAL money!
These markets are not "controlled" except by the constraints of supply and demand. Right now the players would rather screw around with oil since it is a larger market and the timing is right. If the "players" ever wish to get into the precious metals market then the sky would be the limit as these are really very small and just a bit of added demand would escalate prices. The problem is they probably wont as there would be too much scrutiny. IE...It is much harder to hide behind a foreign government in the mining industry.
The only reason oil is high is because there are "players"--one of which was a major Kerry supporter--that are providing artificial stimulus.
Also in your example above....Lumber prices, I believe, are at 2 year lows. Sounds silly when compared to the housing industry but it is true.
Gold is not the most valuable...Water, Oxygen, Oil, gas and gasoline are the most valuable...people can not survive by holding gold in their hand....Why is it that Saudi Arabia when payed want payed in gold for their oil...what do we have that the Saudi's would want...how can the oil rich nations knock us to our knees...If our government was truly tired of these games...they could be stopped...all things happen for a reason, In the end it will be in Gods hands...and he is a knock knock knocken on heavens door! Man will be put in his place...just look at great disasters that have occured this year alone and they will not be the last...just the size of them tells you something.
<< <i>The US has borrowed $5000 per man woman and child since his birth in 5/02. The year prior to his birth the budget was in surplus. >>
Yes, but the previous year we also had a World Trade Center. >>
That was 4 years ago. Deficit remains huge. In the meantime, the administration pushed the medicare prescription drug benefit, while vastly underestimating costs of same. They talk of eliminating the estate tax altogether, despite the fact that the first 1.5 million is exempt. Meanwhile the number of middle class taxpayers ensnared by the AMT grows each year...
Gasoline fell 6.96 cents and crude oil dropped 49 cents to $68.98 in access trading after some pipelines shut down from Katrina were opened and the Loop is operating slowly on backup generators. Contacts we've spoken to said any drop in crude and products may be short-lived, as some reports from the Gulf showing some damage to infrastructure could take months to repair. Ben Bernanke, a frontrunner for Greenspan's job, said $3 a gallon for gas should last at least 6-8 weeks...
Natural gas production for the year is likely to come in below demand, which will keep prices at record levels; it's also worth noting that there is no relief (no SPR for gas) heading into the winter months, when demand will continue to rise...
Gold futures continue to gain buying momentum as the dollar fades against major currencies (now $1.2555 vs the euro, a 3-month low), and as concerns mount that Katrina could cause a slowdown to the U.S. economy. Gold futures are now $450.50 per troy ounce +$4 earlier (now roughly $448)...
Stockpiles at LME showed copper inventories fell 2,425 tons to 65,525 metric tons, causing copper prices to trade a record high in London to $3,692 a ton...
“Gold futures are now $450.50 per troy ounce +$4 earlier (now roughly $448)...”
It’s about time for the speculators to hammer this gold price!
My opinion is we will see gas at an average of $3.00 for all of the remainder of 2005 and all of 2006.
Remember adjusted for the inflation we DO NOT HAVE gas should be $5 according to the experts that say we have NO inflation.
If that sounds just al little strange it is, but then again we only have inflation when the powers that be have to explain why the price of something has gone through the roof.
I would not expect to see gas much under $3.00 for the rest of the year. The FED will likely not raise rates again this year due to the economic damage from Katrina. This would be negative for the dollar and positive for PM's.
I don't think the Fed will stop until Greenspan leaves?
Sept. 6 (Bloomberg) -- The Federal Reserve is likely to conclude that Hurricane Katrina poses more risk of inflation than of an economic slowdown, and probably will raise rates on Sept. 20 while signaling it may pause later if there are lingering effects on growth and hiring.
I think you have seen the top in oil prices. After all, if a major hurricane wipes out a city and destroys or interupts a major oil producing region, and oil only goes up $1, then I ask you.....What will make it go up?
“I think you have seen the top in oil prices. After all, if a major hurricane wipes out a city and destroys or interrupts a major oil producing region, and oil only goes up $1, then I ask you.....What will make it go up?”
This is most likely right, but I still think that the Fed will increase interest rates. There is just no way that the oil price increase and the natural disasters will not add to the inflation problem, the Feds claim we do not have. I think you can expect to see a 10% to 12% across the board increase in all products over the next 6 months. Just the added shipping cost alone might give you that.
Remember a few pages back when we were talking about the 30 billion in budget deficits cost cuts for this year? Well we can kiss that good-bye, the Feds are going to print all the money necessary to cover these disasters, and all that new printed money is going straight into the economy.
So here is my new idea to solve the Hurricane disaster problems on our Coast. Let me know what you think.
The U.S. congress passes the National Sea Shore act.
What the NSSA says is that if your home is totally destroyed by a Hurricane then the U.S. government buys it, and pays you the difference in what the property was worth after you get your insurance payment.
This property goes into the Nation Sea Shore trust and can never be rebuilt on.
The act does not include industrial or commercial properties, but if these are destroyed the government will no longer give any assistance, so you commercial guys keep your insurance up.
Over a period of time all the property along the coasts of Florida, the Carolina’s, LA, Miss. AL, TX, etc that are in harms way would go into the NSS trust to be used by all Americans for vacations only.
A $50 per year vehicle sticker would be issued to everyone wanting to go to the seashore to help pay for the program.
If you did not want to sell out you must forever more cover your own losses with NO help from other U.S. Taxpayers.
We had close to $70 oil before Katrina came along. It's an even bet we'll see higher than $70 oil before the year is out. And likewise with gold exceeding the $455 mark again.
If your home is destroyed by high water then it should be deemed to be in a floodplain. There should be no building allowed in a floodplain. There are millions of acres of virgin land in the USA. I never understood why everyone likes to live on top of one another by the sea. There is a reason that insurers do not offer flood insurance...because they would lose their shirts. Only the infinate wisdom of the government finds this to be a worthwhile cause.
And my bet on oil is $55 by March...... at least I'll keep my fingers crossed.
These Natural disasters along our coastline are just devastating for the folks that live in these areas, but then they are also devastating for many others that did not find it necessary to live in harms way. Estimates for Federal government costs are now over 100 Billion and rising. Naturally there is no set aside funds for this, so the Feds will just print the money and pass the bill along with the rest of the Trillions in debt we have. From a recent article in Bloomberg this morning it now appears that even the most conservative investors that put their money in small government bonds rather than gambling in the stock market will lose billions of their investment dollars.
As usual the fools in Washington are very short sighted to solving this problem, and the cry across the Hill is “we will rebuild everything” This is really nuts considering ALL their own experts are telling them that each year for decades to come cites along the American seashore are going to get hit time after time.
What part of not building in disaster areas do these guys not understand? You don’t build houses on the side of Mt. St. Helens, or on earthquake faults.
Katrina Spells Armageddon for Muni Bond Investors: Joe Mysak Sept. 7 (Bloomberg) -- U.S. municipal bond investors now face their greatest challenge since the Great Depression.
"Soon, we'll be able to see who was right and who was off-base,"
Yes...that will be a treat, not so much for finding fault and blame but more to see where we were right in our prognostications and where we were not so right. The one thing that I notice is that the topics discussed here seem to run well ahead of the popular curve. It's kind of like being a coin market maker but we are an economic predictions maker, gold maker, commodities maker, etc...except the information is for our own use as a group. On the other hand, I can say there have been some significant changes in my strategy based on what I've read here. Another thing is range of opinions out there...maybe at the end of the year we can step back and offer some kind of review.
If you did not want to sell out you must forever more cover your own losses with NO help from other U.S. Taxpayers
Nice idea, and I would support it, but American society does not believe in the word "No."
In the early 1980's congress passed some sort of act that limited building on some types of seashores, but CNN exposed how people ignored it and FEMA paid the bill anyway, citing "Safety Concerns."
In the end, it is the Rich who build and develop housing on seashores, and they aren't about to pay their own way and give up Federal financing of their playpens.
<< <i>This property goes into the Nation Sea Shore trust and can never be rebuilt on. >>
Goldsaint from what I'm understanding is that you don't want people to live on the coast. That's fine for vacationers and the retired but there is another reason these areas are populated - commerce. Where would the fisherman live? What about those working at shipping docks? You can't abandon the shores.
<< <i>The act does not include industrial or commercial properties, but if these are destroyed the government will no longer give any assistance, so you commercial guys keep your insurance up. >>
So the people working at these commercial centers are SOL?
<< <i>Over a period of time all the property along the coasts of Florida, the Carolina’s, LA, Miss. AL, TX, etc that are in harms way would go into the NSS trust to be used by all Americans for vacations only. >>
So shipping can only come into the US from the northern states? We'll move all the ports and oil refineries?
I agree with your point that these disasters are costing us money, but so do earthquakes. Should we impose the same rules on those living near fault lines? Make California a vacation only zone?
Cards Fan, No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way.
If you look at the New Orleans situation the refineries are ready to roll they are only waiting for electric.
I am not even saying we should confiscate peoples properties, but rather offer them NO funds or a fair market buy out once their homes are totaled.
There is no distinction here between rich and poor. If you have a shack on the beach that gets wiped out every few years and you want to rebuild out of your own pocket that is fine.
Lets assume that rich folks are not complete fools so if they are going to build a $2,000,000 home on the beach and there is no water damage insurance offered and NO government help, how many homes will get built?
In a conversation with a friend yesterday in Gulf Port they owned a rental property five houses from the beach and a home 7 houses from the beach. The rental is gone and their home had 4 feet of standing water. The insurance companies would NOT give them water damage insurance since they were not in a flood plain so they are looking to the Feds.
“I agree with your point that these disasters are costing us money, but so do earthquakes.”
I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years?
The main point here, if you read any of this thread is that we do not have any money as a Nation to spend on this. The Hundred billion plus estimates are just going to be printed and the bill passed on to the kids and grand kids. There is no end to these storms.
<< <i>Cards Fan, No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way.
If you look at the New Orleans situation the refineries are ready to roll they are only waiting for electric.
I am not even saying we should confiscate peoples properties, but rather offer them NO funds or a fair market buy out once their homes are totaled.
There is no distinction here between rich and poor. If you have a shack on the beach that gets wiped out every few years and you want to rebuild out of your own pocket that is fine.
Lets assume that rich folks are not complete fools so if they are going to build a $2,000,000 home on the beach and there is no water damage insurance offered and NO government help, how many homes will get built?
In a conversation with a friend yesterday in Gulf Port they owned a rental property five houses from the beach and a home 7 houses from the beach. The rental is gone and their home had 4 feet of standing water. The insurance companies would NOT give them water damage insurance since they were not in a flood plain so they are looking to the Feds.
“I agree with your point that these disasters are costing us money, but so do earthquakes.”
I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years?
The main point here, if you read any of this thread is that we do not have any money as a Nation to spend on this. The Hundred billion plus estimates are just going to be printed and the bill passed on to the kids and grand kids. There is no end to these storms. >>
On your last point you are TOTALLY correct. Back in 1974 -100 billion was 10% of the whole money supply: now 100 billion is only 1% because back in '74 1,000 billion was M3 - now we're pushing 10,000 billion for M3. By the way, the NYC Trade Towers was ANOTHER 100 billion dollar loss. ANOTHER. The killer comes like it did in 1930 when Joe Blow can't make his payments because the interest rates ARE A'RISEN. When the commodities GO SKY high.
Soon GOLD will fly to the forefront when an UNEXPECTED bash of inflation hits the so-called fan. It's coming because other nations need unlimited supplies of commodities and we gave them the US dollars to by them up. Yeah, we can block their buying of big American companies: but not buying up all the other countries on the globe. China is now making deals with Canada and South America.
Funny how the oil prices are softening yet the oil stocks (sharks) smell BLOOD IN THE WATER and are A'RISEN also.
The only wonder I have is why can't silver explode? It's still a precious metal.
Goldsaint from what I'm understanding is that you don't want people to live on the coast.
The idea is for people to be responsible for their actions. They should not expect that living in a beach paradise will cost the same as the ordinary mainland. But they do. And if someone lacks financial backing, then perhaps they ought not to buy a house in the typical path of hurricanes. It's a free country.
<< <i>No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way. >>
I'm not worried about the companies I'm worried about the average Joe that works there. Do you expect them to drive 2 hours to work every day? I agree that something should be done but needs to be more moderate. You're probably going to see less people rebuild after this disaster many of the casinos have announced that they will not return. As people become more scared of the hurricanes they will choose to build elsewhere. As insurance rates and taxes go up people will choose to live elsewhere.
<< <i>I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years? >>
I agree they are not comparable. However once a very large one hits California or the Midwest that may change. We've seen a very active two year period of hurricanes meanwhile a relatively quiet earthquake period.
Are you sure you don’t want a National Sea Shore Act?
If you think these storms do not affect every working American you have not been reading the news.
Hurricane Forces Republicans to Delay Action on More Tax Cuts Sept. 8 (Bloomberg) -- U.S. Republicans are delaying action on central elements of their tax-cut agenda as Hurricane Katrina recovery costs mount and Democrats criticize tax-cutting measures. Congressional Republican leaders postponed a Senate vote to repeal the estate tax.
Cards Fan “Do you expect them to drive 2 hours to work every day?” No Sir, I think one mile of beach with natural forests, dunes, and vegetation restored between the Humans and the Ocean would be sufficient.
<< <i>Are you sure you don’t want a National Sea Shore Act? >>
I'm sure. Although I wouldn't mind some mearsures to take place this would not work. You want the areas to only be open to vacationers, but who is going to vacation in an area with no shops, resteraunts, hotels, etc? You say they can build these but they can't be insured. Those ballsy enough to do this will pass on the cost of this risk to the consumer.
I asked this question a week or so ago, and there was not much response? Are we now going to have a recession on top of our stagflation?
Bankruptcies and Inflation:
Delta and Northwest are no doubt headed to the bankruptcy courts as Delta’s stock today dropped to 71 cents costing shareholders, pension holders and perhaps bond holders billions.
Bloomberg: “As a tougher bankruptcy law loomed just weeks away, the number of Arizonans seeking to wipe away their debts surged.
Filings for Chapter 7 bankruptcy protection, which allows consumers and businesses to liquidate most debts, climbed 39.2 percent in August compared with filings in August 2004, according to data from the U.S. Bankruptcy Court District of Arizona.
Overall filings are up 7.7 percent for the year, echoing a trend seen across the nation as consumers rush to wipe out millions of dollars of unpaid bills. The sweeping changes in the bankruptcy code will make it more difficult for debtors to wipe away credit-card balances, medical bills and other debts.
Based on the average monthly pace this year, Arizona alone could see about 34,000 filings for 2005.
The New York Times: Budget deficits to the left of us, money growth to the right of us, and an oil price shock behind us, will leave only inflation in front of us!
World money growth is at its boiling point. China is printing money at an annual rate of 16 percent; Denmark is 15+ percent; Australia, Britain, and Canada are over 10 percent and broad money growth in Europe is 8%. While the broad measure of money growth in the United States is only 5 percent, growth of total credit is double digit!
The inflation numbers for August and September in the United States should look real ugly. While Congress seems intent to increase the budget deficit by as much as $150 billion to rebuild the south, we will watch the Federal Reserve response very closely and likely see many foreign investors be ready to dump the dollar if the Fed once again listens to the mob's cry for easy money.
All right Gentlemen, like many others here I appreciate your writings this year, and also like others I did buy some extra Gold this year. What is happing now? The dollar seems pretty strong, and the core CPI seems low, but Gold hit a 17-year high today despite those indicators, so what’s next?
ladyship.....what you have read in the paper is that CPI is low, inflation is low, the dollar is strong and rising as well as the economy.........and with all that gold hit $455.
My interpretation of things that you won't often find in the papers or on CNN is that:
the dollar is very weak and has bumped off an upper trend line for months (weakness) without going above .90 on the USD index. CPI is reported by the BLS to be low. Sure, the CPI as formulated IS low...but it has little to do with actual inflation costs. Year over year energy costs are up 20% yet the CPI is only up 3.6% or so YOY. If you take energy and food out (PPI) the net rate of "inflation" is near 2.1%...what malarky. Gold hit $455 today because there are more buyers who sense that inflation is rising, it is understated, and more confidence was lost in paper assets. Hence the flight to gold. Nearly 50% of the CPI index is relatively fixed and resistant to change (home owner imputed rents and durable goods like autos) That leaves only half of it to account for price increases.
We now live in a risk less society right? No Person, City, or State is responsible for anything bad that happens to them right? So why do we even have to have these discussions about printing money to give to people that have suffered losses? I mean just print the darn money, bail these people out, and sell the debt to the Asians, why discuss this at all?
Why is the smart money buying Gold? Hum, I wonder?
Bloomberg News. Time for the Great Debate on Katrina Bond Bailout: Joe Mysak Sept. 16 (Bloomberg) -- The flood waters are receding and the pumping of New Orleans is proceeding, which means it's time to start the Great Public Finance Debate of 2005.
The Great Debate now concerns whether and how the bonds sold by issuers in Louisiana and Mississippi should be bailed out.
It's a big question. You may have read the other week that the rating companies put almost $10 billion in bonds on notice for a possible downgrade. Remember that they only concern themselves with debt they rate. Plenty of small municipalities sell bonds without any rating at all.
Issuers in Louisiana and Mississippi have sold 3,612 separate bond issues totaling $48.6 billion since 1995, according to Thomson Financial. That amount includes bonds sold by the states themselves and their localities and authorities, and includes general obligation and revenue bonds, insured and uninsured. The Katrina problem may be a lot larger than the $10 billion cited by the rating companies.
Which brings us to the crux of the big question: Is it appropriate for the federal government to ensure that municipal debt in this catastrophic instance?
The Congress already has authorized $62.3 billion in emergency spending on hurricane recovery and lawmakers expect the cost to hit $200 billion over the next year, roughly the cost of the conflict in Iraq.
AND WHAT ABOUT THE AIRLINES? LETS PRINT MONEY FOR THEM ALSO!
The bankruptcies of Delta and Northwest threaten to widen dramatically the deficit faced by the federal agency that insures pensions if they both opt to terminate their defined benefit pension plans.
In April, the Pension Benefit Guaranty Corporation, whose deficit hit $23.3bn in 2004, was forced to assume its largest ever pension termination, when United Airlines terminated its defined benefit plans, transferring $6.6bn in liabilities. Initial PBGC estimates suggest that could be trumped by Delta, with $8.4bn in liabilities.
"Gold on Thursday moved to within striking distance of its highest level in more than 17 years as speculators continued to buy the precious metal as a hedge against further falls in the dollar due to the high US trade and budget deficits.
Bullion peaked at $455.10 a troy ounce in London trade, its highest level since last December’s peak of $456.75, which in turn was a level previously reached in December 1987. "
The size of the bill for hurricane Katrina is hardly surprising and there is never an option other than rebuilding. The true cost to the economy is not nearly so large because much of this money will percolate through the economy of the region and the nation and stimulate activity.
It is expensive from a resources point of view and can be inflationary.
We already had some significant inflationary forces at work and this will serve a very useful purpose in taking up some of the slack in the string that the fed has been pushing on.
I'd look for about 1% higher inflation and a 5% higher stock market than we would have had anyway. The market will still move sideways with an upward bias until inflation gets a good head of steam and then it will nearly keep up with inflation.
Comments
USA TODAY
Posted 8/27/2005 1:44 PM
“You owe $145,000. And the bill is rising every day.
That's how much it would cost every American man, woman and child to pay the tab for the long-term promises the U.S. government has made to creditors, retirees, veterans and the poor.
And it's not even taking into account credit card bills, mortgages — all the debt we've racked up personally. Savings? The average American puts away barely $1 of every $100 earned.
Our profligate ways at home are mirrored in Washington and in the global marketplace, where as a society America spends $1.9 billion more a day on imported clothes and cars and gadgets than the entire rest of the world spends on its goods and services.
Federal Reserve Chairman Alan Greenspan criticized the nation's "hesitancy to face up to the difficult choices that will be required to resolve our looming fiscal problems."
But something has changed. More than two centuries ago, Benjamin Franklin warned: "He that goes aborrowing, goes asorrowing." Now, a laugh-til-you-cry commercial portrays a man with a beautiful home and car declaring: "I'm in debt up to my eyeballs. I can barely pay my finance charges. Somebody help me."
Add it up: current debt and deficit, promises for those big programs, pensions, veterans health care. The total comes to $43 trillion, says Walker, the nation's comptroller general, who runs the Government Accountability Office. That's where the $145,000 bill for every American, or $350,000 for every full-time worker, comes from.
The lack of fiscal discipline in the United States is undermining the value of the American dollar, thereby lowering the value of the U.S. Treasuries in foreign banks. As the dollar's value drops, other nations' willingness to keep investing cannot last, says Nouriel Roubini, an economics professor at New York University.
The future poses some frightening what-ifs:
• What if the dollar plummets? Do stocks follow? How about pensions?
• What if interest rates soar? How would all the new homeowners, who stretched to buy with adjustable and interest-only loans, cover their mortgages?
• How would consumers with record credit-card debt make their payments? Would they stop buying? Stop taking vacations? What will happen if they go bankrupt? New rules going into effect later this year make it harder on such debtors.
• How would government, which depends on the taxes of a strong economy to operate, keep all its promises?”
SO HOW WOULD YOU LIKE TO HAVE THIS GUY AS THE NEXT FED CHAIRMAN?
“Ben Bernanke, who recently left the Federal Reserve Board to serve as President Bush's top economic adviser, has argued that the problem is not with the United States. The trouble lies overseas, where people want to save rather than spend their money. The key is to encourage other countries to spend and invest more.”
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
I see the headlines and I know a bunch of folk are going the wrong way on the river of financial life but there are a lot of people that do have their heads in the game, that are saving, that have paid off/are paying off their mortgage, have a 401k that is religiously tended to and keep a little cash around, but that's not newsworthy...all is not bleak because there are a bunch of folk that are paying attention. The lessons of the great generation are not wasted on most people but there sure seem to be a lot of people in the U.S. that are not paying attention.
What does this do to coins and gold? Interesting question. Man, gold is so quiet right now, you could sneak up on it and I would bet that a fair number of folk are doing just that. Coins...becoming a crap' shoot for mid level speculators methinks from the show reports and general drumming from the forest, the frugal serious collector should make out quite well but it's not here yet, the time doesn't seem just right for these folk to come out in force. I suspect the good coins are going into collector hands that are strong and you won't see them again for another 20 years. I do know that my box of 20 won't be going anywhere and I've only got 13 coins in that box, it sure would be nice if the prices would loosen up some and there was some fresh, original, well graded, moderately priced material available...maybe it's coming, we just have to wait. For coin collector folk, it's kind of like the bankers in the housing industry...they know they are going to get some realestate back, they just have to wait.
Enjoy
Sunnywood
Do I ever agree with that!
Seems like the last stats I read said that 120 million Americans currently paid no Federal taxes.
I thought that the 27% Tax that some were advocating seemed high, but watching an analysis over the weekend that included S.C., Medicare, everything.
I guess gas prices would drop to $1.75 and cigarettes, beer, and whisky would be cheap.
One congressman suggested rebates to folks making less than $27,000 per year. My opinion is that this is just a way to eliminate the folks that you have just brought back into the system.
The fact is that even low-income folks are going to pay one-way or another. They can pay with a consumption tax or they can pay with an “inflation Tax” all the same thing but the consumption tax eliminates the IRS.
Sure would make the coin market interesting if all the prices went up 27% overnight.
It does seem the show reports are getting just a little soft, but the auctions seem to be strong with higher prices each quarter on better material.
The price guides are all shot as we can tell by reports from our group, and no doubt everyone could use a break.
Here is a funny observation; the dealers I generally talk to on a regular basis were very bright eyed two years ago with lots of talk and energy. Over the last couple of months they all seem to be in a daze. One dealer I spoke with yesterday trying to negotiate a deal seemed like he could hardly keep in the discussion, his thoughts faded in and out. I think many of these folks are just exhausted.
<< <i>Obviously we need a consumption tax, and more credits for savings.
Sunnywood >>
Why Sure! Another tax! More government! Great thinking!
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Yes, that is true, kind of like real estate during the 90's crash...the good stuff kept appreciating but the mid and weaker stuff went down the hole. I suspect coins are the same way but the prices are so high right now, it wouldn't seem there is much room for speculation other than from the crackout guys. I'm hunting the high quality mid level stuff to hold and it has gotten way too pricey, probably because it is following the high end stuff and the mid/bottom feeders are hoping to score along the way. Very interesting market right now. I heard a story about a brown ike going for mid 5 figures from an old dealer buddy of mine...that's incredible.
Knowledge is the enemy of fear
So what would you all say, is what percent of most dealers business?
It seems to me that a large majority of dealers could not survive on just high dollar material? Plus a great deal of the high-end stuff is now put away.
It also seems to me that the middle class even perhaps the upper middle class is getting squeezed i.e. gas, housing, food, etc. with higher prices all around.
If the buying is curtailed at the mid to lower level of the market and a severe drop occurs then does dome set in on the rest of the market.
To put this in simple talk, and in no way to be prejudice against the lady collectors, how many coins does the old man get to buy when the old lady is pointing out that the gas price is double from last year, the winter utility prices are headed through the roof, the ARM mortgage just went up $200 per month, etc.
So lets say that that the upper middle, middle, and lower ends of the market collapse,
Does the gloom spread to the rest of the market?
Cohodk,
This gold and silver market will just not move above their “ control Prices” until such time as the Fed and the powers that be leave the market to market forces, or the rest of the world takes possession of so much metal that they can not play the short sell game. Anytime gold gets close to $450 they are going to hammer it, and anytime silver heads toward $8 the same thing. Oil, copper, sugar, lumber, all can go through the roof, but the most valuable of commodities are just not allowed to do that, for fear people will treat them as REAL money!
<< <i>Gold prices in London slipped to their lowest levels in 2 wks as concerns that hedge funds may sell b/c damage from Hurricane Katrina was less than originally forecast >>
A heck of a note that people were investing their money in hopes that Katrina would do more damage than it did. What a world we live in...
<< <i>
<< <i>Gold prices in London slipped to their lowest levels in 2 wks as concerns that hedge funds may sell b/c damage from Hurricane Katrina was less than originally forecast >>
A heck of a note that people were investing their money in hopes that Katrina would do more damage than it did. What a world we live in... >>
If the city is going to flood to 15' at high tide they may yet get their wish.
For starters, we should probably not build industry and communities on barrier islands or below sea level.
<< <i>
<< <i>Obviously we need a consumption tax, and more credits for savings.
Sunnywood >>
Why Sure! Another tax! More government! Great thinking!
Well, since our current congress and administration cannot restrain spending AND vastly underestimated the cost of the mdicare prescription drug benefit, we need to do something. The US has borrowed $5000 per man woman and child since his birth in 5/02. The year prior to his birth the budget was in surplus.
These markets are not "controlled" except by the constraints of supply and demand. Right now the players would rather screw around with oil since it is a larger market and the timing is right. If the "players" ever wish to get into the precious metals market then the sky would be the limit as these are really very small and just a bit of added demand would escalate prices. The problem is they probably wont as there would be too much scrutiny. IE...It is much harder to hide behind a foreign government in the mining industry.
The only reason oil is high is because there are "players"--one of which was a major Kerry supporter--that are providing artificial stimulus.
Also in your example above....Lumber prices, I believe, are at 2 year lows. Sounds silly when compared to the housing industry but it is true.
Knowledge is the enemy of fear
How can stuff that is the most valuable be the least priced?
<< <i>The US has borrowed $5000 per man woman and child since his birth in 5/02. The year prior to his birth the budget was in surplus. >>
Yes, but the previous year we also had a World Trade Center.
Man will be put in his place...just look at great disasters that have occured this year alone and they will not be the last...just the size of them tells you something.
<< <i>
<< <i>The US has borrowed $5000 per man woman and child since his birth in 5/02. The year prior to his birth the budget was in surplus. >>
Yes, but the previous year we also had a World Trade Center. >>
That was 4 years ago. Deficit remains huge. In the meantime, the administration pushed the medicare prescription drug benefit, while vastly underestimating costs of same. They talk of eliminating the estate tax altogether, despite the fact that the first 1.5 million is exempt. Meanwhile the number of middle class taxpayers ensnared by the AMT grows each year...
Natural gas production for the year is likely to come in below demand, which will keep prices at record levels; it's also worth noting that there is no relief (no SPR for gas) heading into the winter months, when demand will continue to rise...
Gold futures continue to gain buying momentum as the dollar fades against major currencies (now $1.2555 vs the euro, a 3-month low), and as concerns mount that Katrina could cause a slowdown to the U.S. economy. Gold futures are now $450.50 per troy ounce +$4 earlier (now roughly $448)...
Stockpiles at LME showed copper inventories fell 2,425 tons to 65,525 metric tons, causing copper prices to trade a record high in London to $3,692 a ton...
Knowledge is the enemy of fear
It’s about time for the speculators to hammer this gold price!
My opinion is we will see gas at an average of $3.00 for all of the remainder of 2005 and all of 2006.
Remember adjusted for the inflation we DO NOT HAVE gas should be $5 according to the experts that say we have NO inflation.
If that sounds just al little strange it is, but then again we only have inflation when the powers that be have to explain why the price of something has gone through the roof.
roadrunner
I don't think the Fed will stop until Greenspan leaves?
Sept. 6 (Bloomberg) -- The Federal Reserve is likely to conclude that Hurricane Katrina poses more risk of inflation than of an economic slowdown, and probably will raise rates on Sept. 20 while signaling it may pause later if there are lingering effects on growth and hiring.
Knowledge is the enemy of fear
This is most likely right, but I still think that the Fed will increase interest rates. There is just no way that the oil price increase and the natural disasters will not add to the inflation problem, the Feds claim we do not have.
I think you can expect to see a 10% to 12% across the board increase in all products over the next 6 months. Just the added shipping cost alone might give you that.
Remember a few pages back when we were talking about the 30 billion in budget deficits cost cuts for this year? Well we can kiss that good-bye, the Feds are going to print all the money necessary to cover these disasters, and all that new printed money is going straight into the economy.
So here is my new idea to solve the Hurricane disaster problems on our Coast. Let me know what you think.
The U.S. congress passes the National Sea Shore act.
What the NSSA says is that if your home is totally destroyed by a Hurricane then the U.S. government buys it, and pays you the difference in what the property was worth after you get your insurance payment.
This property goes into the Nation Sea Shore trust and can never be rebuilt on.
The act does not include industrial or commercial properties, but if these are destroyed the government will no longer give any assistance, so you commercial guys keep your insurance up.
Over a period of time all the property along the coasts of Florida, the Carolina’s, LA, Miss. AL, TX, etc that are in harms way would go into the NSS trust to be used by all Americans for vacations only.
A $50 per year vehicle sticker would be issued to everyone wanting to go to the seashore to help pay for the program.
If you did not want to sell out you must forever more cover your own losses with NO help from other U.S. Taxpayers.
roadrunner
It looks as though this could be a very short term effect since restoration of facilities is proceeding apace.
Producers are much slower to lower prices than to raise them so it could be years.
If your home is destroyed by high water then it should be deemed to be in a floodplain. There should be no building allowed in a floodplain. There are millions of acres of virgin land in the USA. I never understood why everyone likes to live on top of one another by the sea. There is a reason that insurers do not offer flood insurance...because they would lose their shirts. Only the infinate wisdom of the government finds this to be a worthwhile cause.
And my bet on oil is $55 by March...... at least I'll keep my fingers crossed.
Knowledge is the enemy of fear
As usual the fools in Washington are very short sighted to solving this problem, and the cry across the Hill is “we will rebuild everything” This is really nuts considering ALL their own experts are telling them that each year for decades to come cites along the American seashore are going to get hit time after time.
What part of not building in disaster areas do these guys not understand? You don’t build houses on the side of Mt. St. Helens, or on earthquake faults.
Katrina Spells Armageddon for Muni Bond Investors: Joe Mysak
Sept. 7 (Bloomberg) -- U.S. municipal bond investors now face their greatest challenge since the Great Depression.
Soon, we'll be able to see who was right and who was off-base,
by reading early posts and comparing the predictions to current events
Liberty: Parent of Science & Industry
Yes...that will be a treat, not so much for finding fault and blame but more to see where we were right in our prognostications and where we were not so right. The one thing that I notice is that the topics discussed here seem to run well ahead of the popular curve. It's kind of like being a coin market maker but we are an economic predictions maker, gold maker, commodities maker, etc...except the information is for our own use as a group. On the other hand, I can say there have been some significant changes in my strategy based on what I've read here. Another thing is range of opinions out there...maybe at the end of the year we can step back and offer some kind of review.
<< <i>Can't believe this thread is on 90+ pages
Soon, we'll be able to see who was right and who was off-base,
by reading early posts and comparing the predictions to current events
This thread is getting pretty long in the tooth.
Nice idea, and I would support it, but American society does not believe in the word "No."
In the early 1980's congress passed some sort of act that limited building on some types of seashores, but CNN exposed how people ignored it and FEMA paid the bill anyway, citing "Safety Concerns."
In the end, it is the Rich who build and develop housing on seashores, and they aren't about to pay their own way and give up Federal financing of their playpens.
<<Soon, we'll be able to see who was right and who was off-base,
by reading early posts and comparing the predictions to current events >>
Baley, a vote was taken (w/o you present) and you are the winner. Please report your findings ASAP
<< <i>This property goes into the Nation Sea Shore trust and can never be rebuilt on. >>
Goldsaint from what I'm understanding is that you don't want people to live on the coast. That's fine for vacationers and the retired but there is another reason these areas are populated - commerce. Where would the fisherman live? What about those working at shipping docks? You can't abandon the shores.
<< <i>The act does not include industrial or commercial properties, but if these are destroyed the government will no longer give any assistance, so you commercial guys keep your insurance up. >>
So the people working at these commercial centers are SOL?
<< <i>Over a period of time all the property along the coasts of Florida, the Carolina’s, LA, Miss. AL, TX, etc that are in harms way would go into the NSS trust to be used by all Americans for vacations only. >>
So shipping can only come into the US from the northern states? We'll move all the ports and oil refineries?
I agree with your point that these disasters are costing us money, but so do earthquakes. Should we impose the same rules on those living near fault lines? Make California a vacation only zone?
No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way.
If you look at the New Orleans situation the refineries are ready to roll they are only waiting for electric.
I am not even saying we should confiscate peoples properties, but rather offer them NO funds or a fair market buy out once their homes are totaled.
There is no distinction here between rich and poor. If you have a shack on the beach that gets wiped out every few years and you want to rebuild out of your own pocket that is fine.
Lets assume that rich folks are not complete fools so if they are going to build a $2,000,000 home on the beach and there is no water damage insurance offered and NO government help, how many homes will get built?
In a conversation with a friend yesterday in Gulf Port they owned a rental property five houses from the beach and a home 7 houses from the beach. The rental is gone and their home had 4 feet of standing water. The insurance companies would NOT give them water damage insurance since they were not in a flood plain so they are looking to the Feds.
“I agree with your point that these disasters are costing us money, but so do earthquakes.”
I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years?
The main point here, if you read any of this thread is that we do not have any money as a Nation to spend on this. The Hundred billion plus estimates are just going to be printed and the bill passed on to the kids and grand kids. There is no end to these storms.
<< <i>Cards Fan,
No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way.
If you look at the New Orleans situation the refineries are ready to roll they are only waiting for electric.
I am not even saying we should confiscate peoples properties, but rather offer them NO funds or a fair market buy out once their homes are totaled.
There is no distinction here between rich and poor. If you have a shack on the beach that gets wiped out every few years and you want to rebuild out of your own pocket that is fine.
Lets assume that rich folks are not complete fools so if they are going to build a $2,000,000 home on the beach and there is no water damage insurance offered and NO government help, how many homes will get built?
In a conversation with a friend yesterday in Gulf Port they owned a rental property five houses from the beach and a home 7 houses from the beach. The rental is gone and their home had 4 feet of standing water. The insurance companies would NOT give them water damage insurance since they were not in a flood plain so they are looking to the Feds.
“I agree with your point that these disasters are costing us money, but so do earthquakes.”
I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years?
The main point here, if you read any of this thread is that we do not have any money as a Nation to spend on this. The Hundred billion plus estimates are just going to be printed and the bill passed on to the kids and grand kids. There is no end to these storms. >>
On your last point you are TOTALLY correct. Back in 1974 -100 billion was 10% of the whole money supply: now 100 billion is only 1% because back in '74 1,000 billion was M3 - now we're pushing 10,000 billion for M3. By the way, the NYC Trade Towers was ANOTHER 100 billion dollar loss. ANOTHER. The killer comes like it did in 1930 when Joe Blow can't make his payments because the interest rates ARE A'RISEN. When the commodities GO SKY high.
Soon GOLD will fly to the forefront when an UNEXPECTED bash of inflation hits the so-called fan. It's coming because other nations need unlimited supplies of commodities and we gave them the US dollars to by them up. Yeah, we can block their buying of big American companies: but not buying up all the other countries on the globe. China is now making deals with Canada and South America.
Funny how the oil prices are softening yet the oil stocks (sharks) smell BLOOD IN THE WATER and are A'RISEN also.
The only wonder I have is why can't silver explode? It's still a precious metal.
The idea is for people to be responsible for their actions. They should not expect that living in a beach paradise will cost the same as the ordinary mainland. But they do. And if someone lacks financial backing, then perhaps they ought not to buy a house in the typical path of hurricanes. It's a free country.
<< <i>No Sir, I think commercial of any kind needed is fine, even casino’s are fine, but these large companies can afford all the insurance money can to pay their own way. >>
I'm not worried about the companies I'm worried about the average Joe that works there. Do you expect them to drive 2 hours to work every day? I agree that something should be done but needs to be more moderate. You're probably going to see less people rebuild after this disaster many of the casinos have announced that they will not return. As people become more scared of the hurricanes they will choose to build elsewhere. As insurance rates and taxes go up people will choose to live elsewhere.
<< <i>I don’t see how we can compare these two. How much money has, and will be spent on the Hurricane disasters over 5 years? >>
I agree they are not comparable. However once a very large one hits California or the Midwest that may change. We've seen a very active two year period of hurricanes meanwhile a relatively quiet earthquake period.
If you think these storms do not affect every working American you have not been reading the news.
Hurricane Forces Republicans to Delay Action on More Tax Cuts
Sept. 8 (Bloomberg) -- U.S. Republicans are delaying action on central elements of their tax-cut agenda as Hurricane Katrina recovery costs mount and Democrats criticize tax-cutting measures. Congressional Republican leaders postponed a Senate vote to repeal the estate tax.
Cards Fan
“Do you expect them to drive 2 hours to work every day?”
No Sir, I think one mile of beach with natural forests, dunes, and vegetation restored between the Humans and the Ocean would be sufficient.
<< <i>Are you sure you don’t want a National Sea Shore Act? >>
I'm sure. Although I wouldn't mind some mearsures to take place this would not work. You want the areas to only be open to vacationers, but who is going to vacation in an area with no shops, resteraunts, hotels, etc? You say they can build these but they can't be insured. Those ballsy enough to do this will pass on the cost of this risk to the consumer.
Absolutely FANTASTIC as long as that consumer is the one at the seashore and not the one in Kansas!
Are we now going to have a recession on top of our stagflation?
Bankruptcies and Inflation:
Delta and Northwest are no doubt headed to the bankruptcy courts as Delta’s stock today dropped to 71 cents costing shareholders, pension holders and perhaps bond holders billions.
Bloomberg:
“As a tougher bankruptcy law loomed just weeks away, the number of Arizonans seeking to wipe away their debts surged.
Filings for Chapter 7 bankruptcy protection, which allows consumers and businesses to liquidate most debts, climbed 39.2 percent in August compared with filings in August 2004, according to data from the U.S. Bankruptcy Court District of Arizona.
Overall filings are up 7.7 percent for the year, echoing a trend seen across the nation as consumers rush to wipe out millions of dollars of unpaid bills. The sweeping changes in the bankruptcy code will make it more difficult for debtors to wipe away credit-card balances, medical bills and other debts.
Based on the average monthly pace this year, Arizona alone could see about 34,000 filings for 2005.
The New York Times:
Budget deficits to the left of us, money growth to the right of us, and an oil price shock behind us, will leave only inflation in front of us!
World money growth is at its boiling point. China is printing money at an annual rate of 16 percent; Denmark is 15+ percent; Australia, Britain, and Canada are over 10 percent and broad money growth in Europe is 8%. While the broad measure of money growth in the United States is only 5 percent, growth of total credit is double digit!
The inflation numbers for August and September in the United States should look real ugly. While Congress seems intent to increase the budget deficit by as much as $150 billion to rebuild the south, we will watch the Federal Reserve response very closely and likely see many foreign investors be ready to dump the dollar if the Fed once again listens to the mob's cry for easy money.
inflation is low, the dollar is strong and rising as well as the economy.........and with all that gold hit $455.
My interpretation of things that you won't often find in the papers or on CNN is that:
the dollar is very weak and has bumped off an upper trend line for months (weakness) without going above .90 on the USD index.
CPI is reported by the BLS to be low. Sure, the CPI as formulated IS low...but it has little to do with actual inflation costs. Year over year energy costs are up 20% yet the CPI is only up 3.6% or so YOY. If you take energy and food out (PPI) the net rate of "inflation" is near 2.1%...what malarky. Gold hit $455 today because there are more buyers who sense that inflation is rising, it is understated, and more confidence was lost in paper assets. Hence the flight to gold. Nearly 50% of the CPI index is relatively fixed and resistant to change (home owner imputed rents and durable goods like autos) That leaves only half of it to account for price increases.
Post by Dan Norcini
Norcini's link above on the JSMineset set discusses today's and yesterday's action.
roadrunner
Why is the smart money buying Gold? Hum, I wonder?
Bloomberg News.
Time for the Great Debate on Katrina Bond Bailout: Joe Mysak
Sept. 16 (Bloomberg) -- The flood waters are receding and the pumping of New Orleans is proceeding, which means it's time to start the Great Public Finance Debate of 2005.
The Great Debate now concerns whether and how the bonds sold by issuers in Louisiana and Mississippi should be bailed out.
It's a big question. You may have read the other week that the rating companies put almost $10 billion in bonds on notice for a possible downgrade. Remember that they only concern themselves with debt they rate. Plenty of small municipalities sell bonds without any rating at all.
Issuers in Louisiana and Mississippi have sold 3,612 separate bond issues totaling $48.6 billion since 1995, according to Thomson Financial. That amount includes bonds sold by the states themselves and their localities and authorities, and includes general obligation and revenue bonds, insured and uninsured. The Katrina problem may be a lot larger than the $10 billion cited by the rating companies.
Which brings us to the crux of the big question: Is it appropriate for the federal government to ensure that municipal debt in this catastrophic instance?
The Congress already has authorized $62.3 billion in emergency spending on hurricane recovery and lawmakers expect the cost to hit $200 billion over the next year, roughly the cost of the conflict in Iraq.
AND WHAT ABOUT THE AIRLINES? LETS PRINT MONEY FOR THEM ALSO!
The bankruptcies of Delta and Northwest threaten to widen dramatically the deficit faced by the federal agency that insures pensions if they both opt to terminate their defined benefit pension plans.
In April, the Pension Benefit Guaranty Corporation, whose deficit hit $23.3bn in 2004, was forced to assume its largest ever pension termination, when United Airlines terminated its defined benefit plans, transferring $6.6bn in liabilities. Initial PBGC estimates suggest that could be trumped by Delta, with $8.4bn in liabilities.
"Gold on Thursday moved to within striking distance of its highest level in more than 17 years as speculators continued to buy the precious metal as a hedge against further falls in the dollar due to the high US trade and budget deficits.
Bullion peaked at $455.10 a troy ounce in London trade, its highest level since last December’s peak of $456.75, which in turn was a level previously reached in December 1987. "
Hee...yum, yum
Got Gold?
the bonds will be covered, if they ever intend to sell more.... and they do.
is never an option other than rebuilding. The true cost to the economy
is not nearly so large because much of this money will percolate through
the economy of the region and the nation and stimulate activity.
It is expensive from a resources point of view and can be inflationary.
We already had some significant inflationary forces at work and this will
serve a very useful purpose in taking up some of the slack in the string
that the fed has been pushing on.
I'd look for about 1% higher inflation and a 5% higher stock market
than we would have had anyway. The market will still move sideways
with an upward bias until inflation gets a good head of steam and then
it will nearly keep up with inflation.