Here is a question I keep coming back to, for decades we have had very strong Unions in this country. Many of these Unions have billions of dollars in pension funds much of which is invested in the stock market, and huge amounts of power with Boards of directors. Just who is watching out for the American workers?Who is voting for the Boards that give the CEO'S the big bucks?
When the 10K’S come out and the company says it is not putting back enough money for pensions why are the Unions not screaming to the Press?
Today Warren Buffet on CNBC disputed the FED's report that inflation was in check. He said that raw materials prices were up strongly for his companies, that he was tring to find investments overseas, and there's not much here. "The US is pumping 1 to 2 billion a day into the world economy and if not this year, next, " so he sees a very weak dollar in the future. He didn't say if he was buying gold/silver---but I wouldn't expect him to say!! Is he right??
<< <i>Here is a question I keep coming back to, for decades we have had very strong Unions in this country. >>
In the 60's and 70's, this would have been the case, but most union's memberships has been dropping and they have given up most of their strength to strike since the 70's. You'll have to blame the pension problem on business.
Dr Sennholz has quite a history. I believe he was a protege' of Von Mises.
Tom
Shades of the Dollar Standard by Hans F. Sennholz
If the love of money is the root of all evil, the depreciation of money must be the mainspring of all shams and frauds. It works silently and covertly, impoverishes many while it enriches a few, and thereby inflicts great harm on social cooperation and international relations.
A few economists are sounding the alarm about the decline of the U.S. dollar. In recent months it fell visibly toward the euro and Japanese yen and is likely to fall even lower. But most Americans refuse to be alarmed as they are unaware of exchange rates and foreign exchange markets. Why should they be troubled about the financial affairs of money traders and dealers?
We may not be able to see the future but always can learn from the past. Looking at the recent history of the dollar, this economist perceives three distinct stages with various characteristics, causes, and consequences. In the first stage from the end of World War II to 1971 the U.S. dollar was tied to a small anchor of gold. President Nixon cut its ties and embarked on a wholly new road of fiat dollar management. Many other countries readily accepted the new system acclaiming its flexibility and manageability. At this time, in 2004, the world is still traveling this road, but several countries are making preparations for leaving it and proceeding toward a multiple standard system. It is not clear whether they will depart in an orderly fashion or in crisis and contention.
The U.S. dollar has been the dominant world currency for some 60 years. At the Bretton Woods international conference in 1944 it was elevated together with the British pound sterling to the position of "reserve" currency in which international payments could be made. It was to be backed by gold and redeemable at $35 an ounce and sterling be made readily convertible at $4.03 to the pound. With the Labour Party in power pursuing a vigorous program of nationalization of industry and extension of social services, the pound soon suffered frequent bouts of confidence; it was devalued to $2.80 in 1949 and to $2.40 in 1967. Issued in ever larger quantities and fettered by stringent regulations and controls it gradually lost its position as reserve currency.
The U.S. dollar, in contrast, displayed great strength and was traded at parity with gold. The recovery of European and Japanese economies from the ravages of war increased their demand for a reserve currency, the U.S. dollar. But soon after sterling had lost its reserve position, the integrity of the dollar opened to doubt and controversy. In the footsteps of the British Labour Party, the Kennedy and Johnson administrations pursued policies of economic and social reform, incurring growing budget outlays. President Johnson not only declared "war on poverty" in order to create a "Great Society" but also escalated American participation in the Vietnam War. His policy of both "guns and butter" built on deficit spending and abundant credit by the Federal Reserve.
In 1968 when the budget deficit reached World War II proportions, the system came within an inch of disintegrating. U.S. balance of payment deficits and loss of gold cast doubt on U.S. solvency. In 1959 the U.S. gold stock had still exceeded $20 billion. It fell sharply to $13 billion in 1965 and 1966, and now touched $12 billion, barely one-fourth of foreign payment obligations. But President Johnson managed to buy time with a stopgap arrangement, involving a two-tier pricing system for gold. The world's central banks agreed to make payments at the fixed price of $35 an ounce while all individuals could trade gold freely at market prices. And in order to enlarge the world's currency base, the International Monetary Fund (IMF) was empowered to issue Special Drawing Rights (S.D.R.s). There was widespread agreement among monetary authorities that the influence of gold needed to be diminished.
While the Federal Reserve was busily increasing the dollar base and the U.S. government was pursuing both wars, President Johnson decided to take corrective action at home. In old Mercantilistic fashion, his administration imposed a new tax on the purchase of foreign securities by Americans. It hesitated to raise income taxes but chose to "jawbone" the people. It ordered American businessmen to reduce their investments in foreign operations and asked American banks to limit their loans to foreigners. The Federal Reserve even raised its discount rate from 4 to 4½ percent, which barely covered the inflation rate.
When President Nixon took office in 1969 he immediately tried to slow down the galloping inflation by vetoing much new social legislation and impounding funds for domestic programs which he opposed. When the country fell into a recession and unemployment climbed to six percent of the work force, he responded with new pump priming. In 1971 and 1972 the Federal budget headed for the largest deficits since the end of World War II. Even the balance of trade fell deep in debt, and the chronic deficits of the balance of payments filled the vaults of many foreign central banks with dollars.
The year 1971 was to be a landmark in monetary history. On August 15, the United States government removed gold as the foundation stone of the international monetary order and rescinded the international agreements that had defined the system since the end of World War II. In a nationally televised address President Nixon simply announced that the United States would no longer honor the 36-year-old commitment to pay international obligations in gold at the rate of $35 an ounce. He imposed a 10 percent surcharge on imports into the United States. And above all, he ordered virtually all wages and prices to stop and freeze. Violators would be fined, imprisoned, or both. When management of the controls proved to create frustrating problems, it underwent four "phases" of adjustment to "problem areas" such as food, health care, and construction.
The Bretton Woods standard survived neither the Vietnam War nor the war on poverty. It was born of Keynesian thought and buttressed with 18th century Mercantilistic beliefs; it died of basic misconception of human action and behavior. John Maynard Keynes who had helped to deliver the system at the Bretton Woods conference sought to promote employment by government spending on public works. Most governments have applied the Keynesian formula ever since. Old Mercantilistic notions and doctrines found a ready home in the Keynesian economic system, pointing toward favorable balances of trade and greater national productive efficiency through a host of government regulations.
The new fiat dollar standard was a germane derivative of the Bretton Woods order without its limitations. Liberated from any gold reserve requirement or other quantitative restriction, it promised to serve political needs as well as the Keynesian requirements for employment and growth. Unfortunately, it proved to be even less stable than its harbinger, more inflationary and, above all, more divisive and injurious to American reputation and prestige.
The fiat dollar standard has profoundly affected the economic lives of most Americans. Soon after the dollar's convertibility into gold was rescinded the Federal Reserve accelerated its money creation. While stringent controls were preventing goods prices from rising, the eurodollar, that is, U.S. currency held in banks outside the United States and commonly used for settling international transactions, commenced a steep slide and U.S. trade deficits grew very large. They obviously reacted in anticipation of ever more dollar inflation and depreciation; money markets tend to anticipate future prices of goods and services. Mutual exchange ratios between currencies tend to be determined by their foreseen purchasing power; they always move toward purchasing-power parity where it no longer makes any difference whether one uses this or that currency.
Withdrawal of American troops from Vietnam did not end the price and wage spirals that were to mark the presidencies of Messrs Nixon, Ford and Carter. The Federal Reserve duly supplied funds at single-digit discount rates, bank credit expanded at double-digit rates, the U.S. Treasury suffered ever larger deficits, and goods prices soared. The Fed occasionally would "tighten" its reins but "real" interest rates always remained relatively low or even below the rates of inflation. U.S. trade deficits increased erratically with dollar funds flowing to Western Europe and Japan. Their support sustained the U.S. But the trade monetary authorities in Europe and Japan were determined to defend the existing dollar parity with substantial purchases of dollars deficits and their own surpluses, which meant to bolster and subsidize their own export industries. The abundance of dollar funds in central banks throughout the world then facilitated an explosive growth of money and credit in most industrial countries.
In 1974 and 1975 the fever of double-digit inflation was briefly eclipsed by the chills of recession. Unemployment rose to 8.3 percent, a 33-year-high nationally, and much higher in construction and manufacturing. It remained high although the chills of recession soon gave way again to the fever of inflation. Money and credit were made to expand again at double-digit rates, trade deficits set new records, and the U.S. dollar deteriorated further in international markets. By the end of the decade the country fell again in the grip of the twin economic evils of recession and inflation. Unemployment rose again while GNP was falling. This time, the Federal Reserve, under new management, meant to call a halt to the turmoil. It raised its discount rate to 12 percent, the prime rate rose above 15 percent, and the eurodollar rate to 20 percent. President Carter even imposed Federal temperature controls in public and commercial buildings, setting minimum summer temperature at 78 degrees and maximum winter temperature at 65 degrees. Many Americans keenly felt the effects of gasoline rationing, waiting in long lines at gasoline service stations. Legislators and regulators had a ready explanation for the crisis: the sheikhs and emirs of OPEC had done it again.
In 1981 President Reagan took the helm of a deeply troubled country. During his eight years in office he managed to lift the spirits, changing the course and relaxing the reins of government. He rolled back the Johnson Great Society but preserved the Roosevelt New Deal. He rejected Keynesian formulas for managing economic demand and instead followed "supply-side" prescriptions which aim to stimulate production and investment by way of tax reduction and removal of some government controls. Mostly at loggerheads with Congress, he insisted on rearming the country and confronting Soviet aspirations. He steadfastly resisted Congressional efforts to boost taxes significantly. With Congress raising social spending and the President expanding military outlays, Federal budget deficits soon exceeded two hundred billion dollars a year; the national debt doubled in seven years.
With the discount rate at 12 percent the quantity of money and credit finally stabilized, allowing the economy to readjust to actual market conditions. A 25 percent Federal tax cut over three years brought some relief to business but tore big holes in the Federal budget and capital market. After the removal of price controls the dollar regained some strength and the American economy became again the engine of the world economy. It slowed down after a spectacular Wall Street crash in 1987 which reflected the international concern about the budget deficits and the chronic trade and current account deficits of the United States and the surpluses of Japan and West Germany. In ages past, the creditors would have demanded prompt payment in gold, which would have forced the debtor to mend his ways or face insolvency. The fiat dollar standard merely prompted contentious diplomatic exchanges – the creditors pressing the debtor to live within his means and the debtor urging his creditors to relax and stimulate their own economies with easier money, larger budget deficits, or both.
The decade of the 1990s was akin to the 1980s. It began with a recession, saw new acceleration followed by deceleration and a "soft landing" in 1995. Great concern about the large balance of payments deficits of the United States led to a sharp decline in the value of the U.S. dollar, especially versus the Japanese yen and the Deutsche mark and other European currencies closely tied to it. Coordinated intervention by foreign central banks was needed to stabilize the dollar. It rallied for a while when several Asian currencies foundered in 1997. Large current-account deficits led to sudden declines and devaluations of the Thai baht, the Malaysian ringgit, the Indonesian rupiah, the Philippine peso, the Singapore dollar, and the South Korean won. The International Monetary Fund (IMF), working in cooperation with industrial countries, kept the Asian crisis from spreading.
Throughout the 1990s the Federal government suffered massive deficits although political spokesmen frequently boasted of budget surpluses. In 1998, 1999, and 2000 the Clinton Administration waxed eloquent about its surpluses which in time would retire the national debt. In reality, the surpluses were deficits financed with Social Security money and other government trust funds. They increased the national debt with Social Security IOUs as much as Treasury bills, notes, and bonds sold to investors; payment obligations to Social Security beneficiaries are as binding as those to investors.
Throughout the decades a few economists always were worried about the magnitude of the trade deficits and the vulnerability of the American dollar. But their fears proved to be unfounded because they underestimated the worldwide demand for dollars and the willingness of foreign investors and central bankers to trust and hold U.S. dollars. After all, until recently the deficits never exceeded three percent of GDP and Americans still were net creditors in their foreign accounts. By now, in 2004, the dollar standard has reached a stage in which not only a few economists but also some foreign creditors are beginning to question its future. The Federal government is swimming in an ocean of debt. In its first term the Bush administration increased the Federal debt by $2.2 trillion. Congress raised the Treasury debt ceiling three times, by $450 billion in 2002, by $984 billion in 2003, and by another $800 billion on November 19, 2004, to $8 trillion 184 billion. The ready willingness of Congress to finance such deficits is a clear indication of the political and ideological mold and make of most members of Congress and the public that elects them.
Foreign observers are drawing similar conclusions. The Bank of Japan with more than $800 billion in dollar obligations already announced its reluctance to increase its holding. China with dollar reserves exceeding $500 billion is laboring under "unsustainable U.S. trade deficits." Asian banks altogether holding more than $2 trillion in American obligations are suffering hundred-billion dollar losses in terms of purchasing power. It is not surprising that the central banks of India and Russia as well as some Middle East investors have begun to sell dollar obligations.
According to some estimates, foreign banks and investors are holding some $9 trillion of U.S. paper assets. They are owning some 43 percent of U.S. Treasuries, 25 percent of American corporate bonds, and 12 percent of U.S. corporate equities. They obviously are suffering losses whenever the dollar falls against their respective currencies; even if they are pegged to the dollar they are incurring losses against all others that are rising.
The dollar standard surely would enter its third and final stage of disintegration if its holders would panic and start selling their American paper investments – their U.S. Treasuries, U.S. agencies, and corporate bonds and shares. The crash would be felt around the world and neither foreign sellers nor American authorities could be trusted to react rationally in the fear and noise of the crash. The scene could be similar to the political bedlam of the early 1930s.
There always is the hope that the primary creditors will act in concert and once again bail out the debtor. The European Central Bank, the Bank of Japan, the Bank of China, and the Bank of England may decide to avert the unthinkable and support the dollar by mopping up huge quantities. The mopping would stabilize the situation once again by inflating and depreciating their own currencies; they would pass the depreciation losses on to their own nationals. Optimists in our midst are hoping for this scenario; they are convinced that the Bush administration will in time save the situation by balancing its budget and the Federal Reserve will allow interest rates to seek market levels. Such a policy would avert the dollar dilemma although it would lead to a painful recession forcing all economic factors to readjust to market conditions.
Pessimists in our midst cast doubt on such a scenario. They point not only to the host of legislators and regulators who cherish their position and power but also to public opinion and ideology which call for government favors. They are prepared to proceed on the present road and brace for the morrow. A few cynics even contend that a government facing a financial crisis of such magnitude is prone to divert public attention from its ominous path by embarking upon foreign adventures.
This economist is ever mindful that debts do not fade or pass away. Individuals must face them, deal with them, or renege in bankruptcy. Governments have an additional option: as the issuers of their own currencies they may inflate and depreciate their debts away. The United States government has done this ever since it cast aside the gold standard and imposed the dollar standard. It undoubtedly will continue to do so as far as the eye can see. It is an iniquitous road which individuals would soon be barred from traveling but governments love to take, shedding their debts one percent at a time. It is a road of the dollar standard designed at Bretton Woods, built by the U.S. government, managed by the Federal Reserve System, and financed largely by creditor central banks in Europe and Asia. It is a road on which the fall in dollar value has inflicted losses on all foreign dollar holders each in proportion to the amount of dollars held. It is the political road of debt default the magnitude of which amounts to trillions of dollars, undoubtedly the largest in the history of international relations. It will be remembered for generations to come.
It is unlikely that the Federal government and the Federal Reserve will soon mend their ways, but it also is doubtful that foreign creditors will continue their support indefinitely. The U.S. dollar is bound to continue to depreciate and gradually surrender its role as the world's primary reserve currency to a multiple reserve-currency system resting on the euro, Japanese yen, Chinese renmenbi, and the American dollar. The multiple-standard system is likely to perform more efficiently and equitably than the dollar standard. Competition would avoid the abuses and inequities of a monopolistic system. Confining the powers of the Federal Reserve System and constraining the deficit aptitude of the U.S. Treasury, it would ward off any further inundation of the world with U.S. dollars.
In idle reverie of years long past, this economist is tempted to compare the gold standard with the dollar standard. Throughout the long history of the gold standard the balance of payments of gold-producing countries was usually "unfavorable." Since the birth of the dollar standard the United States has assumed the position of the gold-producing countries; its balance of payments usually is unfavorable. Much capital and labor were spent to find, mine, refine, and market gold; the United States bears minuscule expense in the production of its money. The quantity of gold coming to market was limited by market forces; the quantity of dollars depends on the judgment of Federal Reserve governors who are appointed by the President. In times of turmoil and war the quantity of gold mined does decline; in such times the stock of fiat dollars tends to multiply and its value depreciates quickly. The quantity of gold is limited by nature and its value is enhanced by many nonmonetary uses; fiat and fiduciary moneys have no such uses or limitations. They are the sorry creation of politics.
January 21, 2005
Dr. Hans F. Sennholz [send him mail] was professor and chairman of the department of economics at Grove City College.
Well we are through the first 50 days of the 2005-year, and what a strange year this is turning out to be. The U.S. coin market seems to be as hot as ever as are many other hard asset markets, with the exception of Gold which seems to be just stuck in the $415 to $430 area, while silver, numismatics, real-estate, and most other hard assets continue to rise. After our discussions here for nearly two years on coming Social Security and Medicare disasters, the Congress is finally trying to figure some way out of those debt traps. Washington continues to press the lie that our economy is still showing very little inflation even though the prices of nearly everything go up every quarter, and the Fed raises interest rates at every meeting. Here is one writers view, “While my living expenses are going up at 8-10 percent a year, I am constantly told that there is no inflation. Last Friday a Fed governor told the markets that inflation is well contained. There is a dichotomy between what I am told by Wall Street and what I actually experience on Main Street. The media and financial professionals are constantly telling me there is no inflation. Yet, what I experience in daily life shows me otherwise. My weekly grocery bill has gone from $200 to over $300 a week in the last three years. That is significant in itself. However, I am only buying for three people versus five people three years ago. My oldest son has gone off on his own and my middle son has gotten married. My weekly food bill has gone up over 50% even though I now buy for a smaller family. My doctor charges me $80 for an office visit versus $60 the year before. My dentist has raised his fees from $45 to $58 for an office visit. It costs me $12 more to fill my gas tank each week and I’m spending $7 a day at the local deli versus $5 a few years ago. My property taxes just went up significantly and my health care premiums are up double-digits. The last time I went to the movies it cost me almost $60 for just the three of us. The cost of the movie was $29.25 the other $30 was for coke and popcorn.” J. J. Puplava
Again this year much of the World economic news is centered on China, and as these writers point out China again will continue to play an ever-increasing part in our U.S. economy as the next few years unfold. “After years of slumber, the world's oldest civilization is now on its way to superpower status. In less than 20 years, China has transformed itself from a basically agricultural economy to the second largest economy in the world and the fastest growing one. It's become manufacturer to the world and by exporting these goods; China is building up huge surpluses, which it's using to invest in countries worldwide. China is our second biggest lender and thanks in large part to China; the U.S. has been living beyond its means and going deeper into debt. In essence, this has amounted to a massive transfer of wealth. China's economy is growing at an annual pace of about 9% and this has been going on for many years. In contrast, the U.S. economy slowed to 3.1%, hindered by its record trade deficit, primarily with China. And there's no sign this will end soon. With a population four times larger than the U.S., China needs to create more jobs and it'll likely keep doing this because textile restrictions were lifted last month. Since Chinese wages are so low compared to other countries, it's estimated that about 30 million jobs will be transferred to China from other countries and this mega trend is going to continue.”
I would be interested to hear from some of you ways to play the continuing China boom. One point of interest in the coin area is Chinese Gold proofs. Many of these have mintages of from 500 to 5,000 coins?
I would be interested to hear from some of you ways to play the continuing China boom. One point of interest in the coin area is Chinese Gold proofs. Many of these have mintages of from 500 to 5,000 coins?
>>
Obviously there are and will be many opportunities to benefit from the economic changes being driven by the changes in China. Coins are an interesting speculation because of the huge population and small mintages. A very similar situation is developing in India which is the world's second largest population (and growing more rapidly than China). This economy has also been doing very well and the populous has historically been a little more interested in coins. Many of the mintages of Indian coins are very low and even those made in billions apparently no longer exist due to heavy attrition in circulation and subsequent melting. Neither of these countrys' modern coins were widely collected in this country due to the language bar- ier or domestically because of lack of interest.
actually the collecting and saving "rare" or antique coins, in gold or silver was highly illegal in China. Your statement "lack of interest" doesn't hold water.
An unregulated free market does NOT work. It didn't work 100 years ago, it didn't work in 1929 and it doesn't work now. People who don't learn from history are doomed to repeat it and are usually Republican.........
Maybe the above is true, but doing basically nothing in 1929 and in 2001 would have left us in better shape than we are now. But I know that REGULATED (manipulated) markets don't work either. They were strongly manipulated in 1929-1934 and that only extended the great depression. Give WW2 and a bunch of $$ credit, for pulling us out, not the socialistic programs of the 1930's. The govt has a hand in nearly every major market out there, including gold. And it doesn't work (also housing, stocks, commodities, bonds, world currencies). Our asset bubbles have been stretched to their limits.
I had a nice discussion with one of my co-workers yesterday who felt that a constant 3% inflation and $600 BILL debt/year is a GOOD thing! And his basic reasoning was that because of our extensive debt and budget deficits, we avoid DEFLATION, which is FAR worse for our economy and country. This is sort of like cutting off your limbs one by one to protect your heart and lungs. Insipid inflation due to the actions of the Federal Reserve System and Central Banking continue to transfer the nation's wealth to those same bankers. I perceive this as far worse than any "deflation." Business cycles have always had a period of some inflation followed by some deflation (recession). The manipulation since 1913 now ensures that these cycles have bigger ups and bigger downs. I don't see how this is "better."
By terrorizing the common man with the thoughts of the bogeyman (DEFLATION), our political and economic leaders have somehow convinced the majority that INFLATION is a normal and expected result of a growing economy? HUH?? A good thing? You've got to be kidding me! Housing prices constantly rising over the past 30 years is a good thing? 20%/year housing gains is normal and healthy? Why couldn't they have stayed the same? That would have been good! But coming off the gold standard in 1974 and printing lots of money since then to battle every calamity that popped up, charted us into constant inflationary waters. But the end result of an inflationary cycle, and it will eventually come, is a deflation. And the longer and more pronounced the first cycle, the longer and more pronounced the deflationary cycle. But while the credit lasts, we can all live higher off the hog and feel wealthier....until the inevitable correction.
<< <i>An unregulated free market does NOT work. It didn't work 100 years ago, it didn't work in 1929 and it doesn't work now. People who don't learn from history are doomed to repeat it and are usually Republican.........
Sure sure sure so what WE the people need is to be controlled and manipulated by other people who get paid to do the controlling and manipulating, and even get to steal just about as much of we the people's earnings, thereby forcing us to work much longer in our lives just to pay for the lowlifes who manipulate and control us.
Yeh that's a great idea.
And people who believe this are either republican or democrat as they sure as heck don't believe in the Constitution or freedom or even have a clue as to WHY this place was so unique for nearly 100 or so years.
Housing prices have to rise every year so that homeowners are duped into paying property taxes. If prices were stable, but property taxes and tax rates went up every year..... well that would last about 3 years before homeowners wanted new politicians in office.
As it is, people can brag about how much their house went up - along with everyone else's - and gloss over the taxes.
<< <i>Gold saint not to push your buttons but what do you eat for 300 a week i agree with your thoughts but i'm wondering about your food bill lol >>
Why is that funny and where do you live? Someone else paying your bills? I pay $200 ( average) a week at Publix ( it's just my wife and I and 2 cats), plus another 50 bucks at the butcher, and another 100 for "a" dinner out. And we sure as heck aren't living on Boca Grande, we're in Port Charlotte.
I don't think its funny, in fact I think it's quite pathetic that this government needs to steal from "we the people" to subsidize farmers, while importing food from other countries that are grown in abundance right here.
Never in my life did I think my food bills would be greater than my mortgage but they are.
I live in South Dakota and i didn't mean it was funny just to not go off on it as i was just wondering i buy in bulk half's of beef & chicken's and i have been to new york and europe so i know it can be a lot but bottom line it's how you buy as well as where sorry if i offend anyone
On your food bills you should look at where the money is going the store that sells it has a 30 to 50 per cent mark up on it a bag of corn chips 3 percent is the corn in it most items follow the same mark up pop at your local fast food cost them less then the 1 and1/4 cent paper cup it's in i don't have any answers but you need to look at the problem not the one your thinking all the time just my thoughts
one more thing on this you may think i'm nut's but the fact is my brother's father in law owned cub foods before they sold out so i know of what i speak his name was randall he is from mitchell south dakota ran his local store's under that name nationally cub foods check it out frist name ron
I live in New York and my wife's and my food bill for the two of us and our dog runs about $100 week. $300 a week would get me crazy. I admit we try to buy what is on sale and buy more of those items.
Went to the Palm restaurant in New York City last night and ate very well (no lobster though) and on a special occasion, could not spend above $55 a person including drinks and tax.
WAYNEME, Sorry about the confusion, I agree with you that does seem high to me for a food bill also. This statement was part of the story from J. J. Puplava and I don’t know where he lives perhaps CA.
VIENNA, Austria - Crude oil futures rose above $50 a barrel Tuesday as traders worried about a production cut from OPEC (news - web sites), even though the cartel's president said such a move is unlikely when the group gathers in Iran next month.
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Prices crested amid cold spells in Europe and the United States, concerns about production shortfalls and continued high demand as well as the uncertainties over the strategy of the Organization of Petroleum Exporting Countries.
Light sweet crude for March delivery climbed $1.80 to $50.15 a barrel in morning trading on the New York Mercantile Exchange. The March contract expires Tuesday.
Heating oil futures rose 4.67 cents to $1.396 per gallon on Nymex, while Brent crude was up 57 cents on the International Petroleum Exchange, fetching $47.30 a barrel.
OPEC's wait-and-see approach has rattled traders, said Victor Shum, an analyst in Singapore for Purvin & Gertz, an energy market consulting group.
Julian Lee of the Center for Global Energy Studies in London said uncertainty over OPEC's plans is "having an impact because the market is fundamentally tight."
He said shortfalls from many non-OPEC producers over the past year have added to bullish sentiment, "and on top of that demand growth hasn't slowed down as much as some people expected it to."
These factors, and an OPEC cutback estimated at 600,000 barrels a day for last month alone, "have conspired to tighten the market," he said.
Adnan Shihab Eldin, acting secretary-general of OPEC, has said the group may cut up to 1 million barrels a day. But Nigeria and fellow OPEC member Algeria have suggested no major reductions are needed.
The president of OPEC — also Kuwait's energy minister — added his voice Tuesday to those in the organization against reducing production.
"Until now we don't have to cut, until now the price is very high and we have to respect this price and to cooperate with others for the stability of the market," Sheik Ahmed Fahd Al Ahmed Al Sabah said.
OPEC collectively produces more than a third of the world's crude, and its decisions on raising or lowering output can have a significant impact on prices, especially at a time when global demand remains robust and there's little spare supply capacity.
Shum said traders would remain on edge in the run-up to the March 16 meeting, but he believed there would be no actual cut in supply from OPEC if prices remained above $48 a barrel in the coming weeks.
"Just by talking and keeping people in suspense" OPEC could put a floor under prices, Shum said, adding that he expected crude to trade between $45 and $50 a barrel over the coming months, barring an unexpected shock.
Vienna-based OPEC comprises Algeria, Iran, Iraq (news - web sites), Indonesia, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. At present, however, Baghdad does not participate in its output pacts.
A very short time ago, $30.00 oil seemed high, now we've accepted $45.00 oil as the norm. This can't help but effect the US economy negatively, not saying anything about the lifestyle that Americans have come to expect. If I had large interests in the financial well being of oil companies, I'd feel down right presidential about these changes.
<< <i>A very short time ago, $30.00 oil seemed high, now we've accepted $45.00 oil as the norm. This can't help but effect the US economy negatively, not saying anything about the lifestyle that Americans have come to expect. If I had large interests in the financial well being of oil companies, I'd feel down right presidential about these changes. >>
“Crude Oil Prices Rise Above $50 Mark” In an interview with Boone Pickens and several other oil experts over the weekend they all agreed that we would see $60 oil before we saw $40 oil again.
“The need for such alternate fuels is economic, strategic and in the interest of national security.”
Bear, We already have many other alternate fuel sources and delivery systems, but our economy could never stand the shock of massive conversion. In the late 1980’s I,and some others, developed a plan for Texas to convert vehicles to use natural gas. We developed a public company, got legislation through the Texas house and senate, and all State and County vehicles were to be converted by no later than 1998. We built several fueling stations in Texas and converted many cars and trucks. When we went to the capitol markets, the investment bankers in Austin wanted only Dot Com deals, and the big oil companies, as well as the auto manufactures did everything they could to drive our small company into bankruptcy, which they did by 1995. I had one of the first pick-ups in the state that ran on compressed natural gas and gasoline. If your natural gas ran out you just flipped a switch on the dash and went back to gasoline. We could not believe how the powers that be came down on us. A real missed opportunity for our State.
Buying Coins on Credit? I thought I would write a quick note on the new Readers Digest report on current American credit card debt. This is really overwhelming. Their staff research people have just finished and reported the following stats.
“Americans bought over $2 trillion dollars worth of stuff on their credit cards last year.
Current outstanding debt on credit cards is $700 billion dollars, this is the part we did not pay off. This is up from $50 billion in 1980.
3 of every 5 Americans cannot pay off their credit cards each month, and their balances run an average of $12,000, which is one forth of the medium annual household income.
Senior Citizens once noted for their frugality are sinking deeper into debt. Their average credit card debt is up 89% from 1992 to 2001.
Total consumer debt averages $7,100 per person currently in the U.S. not including mortgages.
In 2003 Banks mailed out 5.2 Billion offers for credit cards!!
The average college student owes $2,800 on their credit cards.”
Unlike our government which can just print the debt as long as some foreign country will buy it, what happens to the economy when things get to the point that individual folks just can buy no more, or can never pay off what they owe?
Although it may seem outragous that America should have such huge personal debt it really is part of the overall plan. Why else would Congress be moving so fast to rewrite the bankruptcy laws to be sure that those with 29% interest loans are never let off the hook.
Rates like that used to be called loan sharking and prison sentences were given out. Now corporate America can lock in the little people to a life of interest rate slavery. Of course they could always get a payday Advance loan if they need to eat, borrow 100 pay back 150 in a week.
Now we know why Organized Crime has declined in America. Alchohol Sales, Loansharking and gambling are now all controlled by major corporations. If Al Capone was alive today he would be a CEO.
<< <i>Although it may seem outragous that America should have such huge personal debt it really is part of the overall plan. Why else would Congress be moving so fast to rewrite the bankruptcy laws to be sure that those with 29% interest loans are never let off the hook.
Rates like that used to be called loan sharking and prison sentences were given out. Now corporate America can lock in the little people to a life of interest rate slavery. Of course they could always get a payday Advance loan if they need to eat, borrow 100 pay back 150 in a week.
Now we know why Organized Crime has declined in America. Alchohol Sales, Loansharking and gambling are now all controlled by major corporations. If Al Capone was alive today he would be a CEO.
Short term fix of course, INFLATION. >>
Keep in mind though that they are compensating for overcharging on interest by paying less than 1% for the money they loan.
The condition of the U.S. Dollar is perhaps one of the least thoroughly reported on topics in the press today. Sure, you will read the daily article rehashing a load of ambiguous language uttered by some central banker or government official. And you may even come across the occasional news story of how a particular currency's movement has affected an industry such as tourism or textiles. But what you will never read about is the vicious clandestine battle being waged by various governments and interest groups around the world.
Because the U.S. Dollar acts as the world's reserve currency, any sudden drop or rise in its value creates winners and losers. And if the status quo (in terms of the Dollar's value) is achieved, yet another list of winners and losers is produced. This is why politicians and government officials would prefer to downplay the issue altogether - no need to make new enemies. That being said, the Dollar's drop over the last few years is slowly creeping into the national debate. What is fascinating about the topic of the Dollar is how the issue cuts across party & international lines and creates a series of strange alliances.
While farmers, manufacturing companies and exporters have traditionally lobbied for a weak Dollar, labor unions have started to echo this sentiment as they see manufacturing jobs shifted to less developed nations. Politicians in textile-producing districts have been quite vocal when it comes to the issue of China revaluing their currency. The theory is that a stronger Yuan (ergo a weaker Dollar) will make the environment between Chinese laborers and American factory workers more competitive. However, this argument is flawed because anything short of a six-sigma revaluation would do nothing more than make a tiny dent in China's competitive advantage where labor costs run at a fraction of the cost of the U.S. work force. Moreover the Chinese government does not want to see its unemployment rate shoot up, especially since there are so many unemployed migrants as it is. So the bottom line is that the Chinese Communist Party will continue tolerating commodity price inflation (as a result of its artificially low Dollar peg) rather than face waves of angry unemployed citizens.
Aligned with the anti-weak-Dollar Chinese are the Europeans, importers such as Wal-Mart, and creditors including large money center banks. Any Dollar depreciation against Asian currencies means higher prices for Wal-Mart which would hurt sales and margins. Continued Dollar depreciation against the Euro makes European exports less competitive. Hearing a European government official complain about the Dollar is more common today than ever. Finally, the large money center banks on Wall St. are overwhelmingly in favor of a strong Dollar. These banks are creditors and the last thing they would like to see are their loans being paid back in weaker Dollars. More importantly, a Dollar crisis would spell trouble for U.S. assets including corporate bonds and equities. And any softening of demand for Wall St.'s securities must be avoided at all costs in their eyes.
One last constituency who has a major stake in the future of the Dollar is the average Joe Six Pack. But his position is contradictory. On one hand, being the over-consumer that he is, Joe loves a strong Dollar because he can buy his plasma screen television at a good price. And because the strong-Dollar environment has created low interest rates over the last decade, Joe can finance his new purchase at rock-bottom rates. On the other hand, Joe is in debt up to his eyeballs and doesn't know how he'll ever be able to pay off his credit cards. Dollar weakness would help inflate Joe's debt away over the coming years with minimal pain.
So who will win and who will lose? Warren Buffett, one of our investing heroes, has just come out with his most recent annual letter where more than two full pages are devoted to warning his readers about America's alarming trade deficit. He points out that the "force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily" and that America's trade policies are turning it into future a "sharecropper's society". Buffet, who blames both political parties for our current situation, has made a large bet against the U.S. Dollar ($21.4 billion in foreign exchange contracts at year-end spread among 12 different currencies). It's hard to argue with a man who has $40 billion reasons to think he is right. Over the long run, we agree that absent large changes in trade policies, the U.S. Dollar is toast.
March 08, 2005 Todd Stein & Steven McIntyre Texas Hedge Report
Coynclecter, Thanks for your post of this very interesting article, Debt Slavery .I think this absurd new bankruptcy bill has now passed with by-partician support. I am sure we will not have debtors prison right away, but perhaps work farms for repayment of credit cards are on the way. One of the things that I really wonder about is why this bill was not a choice Philabuster by the Dems?
At one time many years ago we had a usury law in my state of Texas but it was a democrat that got rid of that protection for our folks here?
This is truly pitiful? I am not saying that debtors should have no responsibility, but to blanket all situations is absurd.
“Congress seems determined to make sure that individuals enter the world of Debt Slavery and want the courts to be the collection agency. Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement. (Surprisingly, these new bankruptcy laws will still allow corporations to stiff their creditors. Indeed, how could "The Donald" afford to buy and/or maintain his mansions without stuffing his junk bond holders with his casinos in Atlantic City?) Debt Slavery is a cornerstone of the Ownership Society. Why? Because now the bank owns you!”
This bankruptcy bill has come at an interesting time just as Americans have gone into the biggest credit binge in US history. It would appear that the Congressman want to ensure that all those 1st, 2nd and 3rd homeowners, as well as everyone maxed out on multiple credit cards, pays up every cent when the housing market and stock markets go south. I mean it just wouldn't be right to put some of the blame on the FED or Treasury responsible for offering ridiculously easy credit and interest rates for the past few years. The people did exactly what the FED wanted, go further into debt to continue floating the economy.
I assume that the US Government with it's out of control spending will not go bankrupt either. As such, hide what you can cause they're coming for what you don't hide.
I don't see the spending slowing down any however. Not by government anyway.
Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement.
Well dam, next thing is they'll expect people to work in order to be paid.
<< <i>Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement.
Well dam, next thing is they'll expect people to work in order to be paid.
Somebody put a stop to this madness..... >>
Well certainly if you were referring to the amounts this government steals from us and spends without so much as a consultation.
Putting a stop to that would be nice but it's not going to happen.
Ok, bubble in real estate? ( prices are getting pretty HIGH here in South Fla), or which market goes pop first?
Anyone watch the dollar today?
Tom
Five years after Nasdaq bubble burst, questions hang over Wall Street
Wed Mar 9, 3:10 AM ET Top Stories - AFP
NEW YORK (AFP) - Five years after the bursting of one of the biggest stock bubbles in history, analysts say Wall Street and the tech sector are in good shape -- but that it will take a long time to get back to the lofty levels of 2000.
Amid a tech-sector frenzy, the Nasdaq composite index surged to an all-time closing high on March 10, 2000, of 5,048.62, a level that Wall Street veterans say will take many years to reach again.
The Nasdaq -- dominated by technology stocks and dubbed the "new economy" index at the time -- ended up falling 78 percent from its peak to 1,114.11 on October 9, 2002, in the worst collapse for a major US stock index since the Great Depression.
The dot-com mania of the late 1990s lured millions of investors in what analysts say was a classic bubble, although many refused to acknowledge it at the time.
The Nasdaq surged 86 percent in 1999, only to see those gains evarporate the following year in one of the worst bear markets ever.
"I've been a full-time student of the market for 45 years, and I've seen a lot of bubbles, but the biggest bubble I've seen was the high-tech Internet bubble," said Alfred Goldman, chief market strategist at AG Edwards.
"But as a famous prizefighter once said, the bigger they are, the harder they fall."
Peter Cardillo, market startegist at SW Bach, said it was hard for Wall Street professionals to dissuade people from jumping into the market with dreams of getting rich.
"I distinctly remember being on the phone from 5:30 in the monring to 8:30 at night, and many young people calling me on the phone, children at school wanting to buy technology stocks," Cardillo said.
"Young kids, instead of watching cartoons or baseball, were watching the stock market."
Cardillo said he and others tried "to sound the alarm" that stock prices were moving too fast, "but how could you fight it?"
In the end, Cardillo said, "most people got burned," especially small investors, many of whom had socked away money in retirement plans.
The speculation was fiercest in the tech sector. Other market indicators saw a sharp correction, but the blue-chip Dow Jones Industrial Average has returned to within striking distance of its all-time high of 11,722.98. And the Standard and Poor's 500 is not far from its record high of 1,527.46.
But the Nasdaq, despite a sharp rally from its 2002 lows, was struggling to get to 2,100, and would need to more than double its value to get back to the peak of five years ago.
"Clearly in hindsight, it was a bubble and very often it does take some time to reach the previous peak," said Scott Brown, chief economist at Raymond James and Co.
But Brown said that technology company fundamentals appear "more promising" now.
"There was a bubble element in Internet, but if you look at capital spending now ... the recent trends are very promising. The technology wave was real. The new technologies gave us greater efficiency."
Goldman said investors may have learned a lesson from the collapse, but that does not mean more bubbles won't occur, noting that real estate and the bond market have been showing heady gains.
"It's just human nature," Goldman said. "We now have a feeding frenzy in the energy sector. When you get these bubbles, they go higher than anyone anticipates and when they fall they go lower than anyone anticipates. The good news is the overall market is reasonably priced."
Still, the analysts say investors should not expect to see the Nasdaq at 5,000 again any time soon.
"I don't think we're going to see that for a long time," Cardillo said. "I think the chances of seeing Nasdaq at 5000 in next 10 years are nil or next to zero."
Well this is certainly having more of an impact then what is being reported. What do you reckon their buying with the cash?
Dollars and dollar related instruments?
Tom
Oil Prices Soar Above $57 on Supply Fears
1 hour, 4 minutes ago Business - AP
By BETH GARDINER, Associated Press Writer
LONDON - Crude oil futures prices soared above $57 a barrel for the first time Thursday after OPEC's pledge to increase output failed to assure traders who were worried about tight supply.
Light, sweet crude for April delivery rose 78 cents to $57.24 a barrel on the New York Mercantile Exchange by afternoon in Europe, after reaching as high as $57.50. The previous intraday high, set in October, was $55.67 a barrel.
Heating oil rose more than 2 cents to US$1.6145 a gallon.
Brent crude also reached new highs, hitting $56.15 a barrel before edging back. In afternoon trading it was up 83 cents to $55.71 on the International Petroleum Exchange.
In a monthly report released Thursday, the Organization of Petroleum Exporting Countries warned that economic growth in the United States, China and Japan would push demand for its oil even higher in the second half of this year. It also said it was unclear what impact the resulting price increases could have.
"Oil prices rose further in March and the capacity of consumers and companies to absorb such increases is a further uncertainty," OPEC said.
OPEC members meeting in Iran (news - web sites) on Wednesday agreed to boost the group's output quota by 500,000 barrels a day, or 1.9 percent.
The market was unimpressed with the decision, because members of the oil cartel who are supposedly bound by its production quota are already exceeding the previous ceiling by about 700,000 barrels a day — meaning no extra supply will actually be added.
OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah also said the additional barrels may not come until May, since members are already supplying more than planned.
"This is not about lowering prices. It's about stopping them skyrocketing," Yasser Elguindi of New York-based Medley Global Advisers said on the International Oil Daily Web site. "We are going to be either side of $50 with spikes to around $60."
Bruce Evers, an analyst with Investec Securities, said traders are convinced the announcement "won't be enough and it's going to leave the supply side of the equation very stretched."
With capacity so tight and demand expected to increase later in the year when winter hits, an unforeseen supply disruption — like a bad hurricane season in the Gulf of Mexico or political instability in Nigeria or Venezuela — could send prices even higher, he warned.
"Sixty (dollars a barrel) is question of when, not if," Evers said.
Simon Wardell, an analyst with the Global Insight consulting group, said "this is definitely a structural price change" driven by demand outpacing supply.
China, the world's second-biggest oil consumer after the United States, is already guzzling more than a third of the world's crude supplies. Chinese fuel use will rise 7.9 percent this year, or 500,000 barrels a day, to 6.88 million barrels a day, according to the Paris-based International Energy Agency.
The agency said last week it expects petroleum needs this year to increase 2.2 per cent, by 1.81 million barrels a day, to a new daily total of 84.3 million barrels.
Wardell said OPEC was producing almost all the oil it can pump. That means the upward price trend is unlikely to reverse unless demand slackens significantly, "which would mean a fairly sharp drop in economic growth," he warned.
Crude futures shot up more than US$1 a barrel Wednesday after the latest petroleum supply report from the U.S. government showed a sharp decline in domestic supplies of gasoline and heating oil last week.
In its report for the week ending March 11, the Energy Information Administration said gasoline stocks fell by almost three times more than expected, by 2.9 million barrels, to 221.4 million barrels, compared with consensus forecasts for an increase of 800,000 barrels.
I've noticed recently that platinum and palladium have been moving upwards in price. It wasn't too long ago when Pt was only at around 820 an ounce, and now it's getting very close to 900 an ounce. Makes me wish I had picked some platinum up a while back. (Thankfully I did buy some Pd at its very low point of about 180 an ounce). With Pt and Pd being such great catalysts, it makes me wonder if some new 'cleaner emission' cars are in the works?
I collect the elements on the periodic table, and some coins. I have a complete Roosevelt set, and am putting together a set of coins from 1880.
WOW can this be happening? Are we in for another stock market crash? How far are Ford and Chrysler behind GM?
Now our car companies are beginning to look like our airlines.
What happens to the coin market if our country has losses like this?
By Jason Hommel “On March 15th, 2005, (the ides of March) we may have just witnessed the beginning of the death of our financial system as General Motors stock took a nosedive from $34/share down to $30. http://finance.yahoo.com/q/bc?s=GM&t=5d&l=on&z=m&q=l&c=
It does not seem like much (GM down just over 10% in one day), but as of March 17th, the stock is down to $28.35, and the market cap is down to $16 billion. (GM is down nearly 18% for the week.) It's the type of volatility that we usually only see in silver stocks!
What does this mean? GM's stock price decline is like a dagger right into the heart of the U.S. financial system, and the dollar itself!
Why did it happen? Apparently, someone in power did the equivalent of shouting "the emperor has no clothes" and people woke up, and are beginning to see more clearly! The media decided it was time to expose the truth that GM is nearly insolvent, and will expect to lose $1.50/share in the first quarter alone!
But the story is worse than that! GM has $300 billion in debt http://finance.yahoo.com/q/ks?s=GM ...and has a market cap, now, of $16 billion. See the problem there? The bondholders could buy the company nearly 20 times over if they used their money to buy stock instead of loan it to the company.
The implication is clear--that GM is headed towards bankruptcy, and will default on the bondholders, who will then own a company worth less than $16 billion dollars! For every one point that interest rates rise, refinancing GM's debt will cost an additional $3 billion in annual interest payments -- money that they clearly do not have! Where is GM going to get another $3 to $6 to $9 billion as interest rates rise by 1%, 2%, and 3% more? Selling cars? Nope. Selling stock? Unlikely in this market! Borrowing more? From who? The U.S. government itself is propping up this bond market, and there are no buyers even for U.S. bonds, and there haven't been for months now!
So, therefore, GM will soon be a $300 billion dollar blow-up! How big is that? It's bigger than Enron, Global Crossing, LTCM, K-Mart, and the IRAQ war all put together! $300 billion going belly up is a big enough event to topple the U.S. government! How so? It will shake the confidence in the entire financial system. Companies as big as GM are not supposed to go bankrupt in our "normal" world. They are "supposed" to be "too big to fail".
The value of the "official" U.S. gold hoard of 261 million oz., at $440/oz. is only a mere $115 billion. See what this $300 billion blow-up will mean? Imagine the financial chaos as a pile of wealth almost three times larger than the current value of the U.S. "official" gold hoard evaporates! The annual deficit is around $700 billion. How will the U.S. government sell bonds to finance the deficit if bondholders are getting wiped out?
If the government can't sell bonds while running a deficit, then the government must simply be printing money to fund the deficit--and they are, as can be seen in the rate of growth of the money supply, M3! Therefore, inflation is raging, and interest rates must keep pace, which is why GM is doomed!
Interest rates must head up, as confidence in the U.S. dollar bond market will be shaken like a tree in a hurricane! Foreign nations are all sounding the alarm already that they will be selling U.S. bonds to diversify the holdings of their central banks: Russia, India, China, South Korea, Japan... what major foreign nation is left to buy them?”
Some interesting opinion presented as facts of course... but I'm wondering why the author completely bypasses the issue of GM's preferred stock(s). Preferred stock owners are ahead of common stock holders when a bankruptcy occurs. Does the $16 B market cap include the preferred stock?
Rough numbers only.....
Ford (F) Market cap = $20 B Debt = $170 B
Daimler Chrysler (DCX) Market cap = $46 B Debt = $99 B
The US auto industry is not in particularly good shape. The airlines already have huge problems. Companies like GM operator more like bankers (credit lenders) than they do car manufacturers. It is not a sunny outlook. As far as the possiblity of "another" stock market crash, we really haven't had the first one yet if you look at the DOW. It is not a matter of if, but when. Only thing that has delayed it is the massive liquidity generation authorized by the FED over the past 4 years.
<< <i>The US auto industry is not in particularly good shape. The airlines already have huge problems.
Roadrunner, if there was real free market competition in the airlines, and I don't even know if such a thing could be possible, US domestic airlines would REALLY be hurting and find themselves having to make giant changes or disappear.
I don't know what European airlines are like to fly, but I'm real familiar with Asian carriers are like having flown almost a dozen times back and forth to Asia not to mention a couple dozen inter Asian country "domestic" flights and there's no comparison between say a US Domestic and a Cathay Pacific, Eva, Singapore Airlines or even a Thai airways or Vietnam Airlines for that matter ( who was just given an ok for direct flights to the US by the way).
The level of quality just isn't there, with our domestics and it's a shame, but, oh well.
So many industries are like that though. On a real light side, I just had a "booster pump" put on my house to increase the water pressure. Not many plumbers even knew what I was talking about when I called, one actually referring me to somone who "does that kind of thing" endquote, who quoted me 700 bucks and finally I asked a contractor friend of mine who is from England who said, no problem, went, bought the pump, came and installed it, done @ $500 bucks. I looked at where the pump was manufactured.
It seems obvious that as socialism has crept into every part of our lives through our governments, it has also crept into our largest corporations either through their non consideration of what would happen long term, or through the governments insistence that they take on part of the burden for seeing that people that worked for them were taken care of for life. Many of these big companies are having, or are going to have, their own internal Social Security and Medicare melt downs.
In the case of GM what is surprising is that this is happening even before their large group of Baby boomers get to the trough.
One of my office associates has a father-in-law that worked for GM for 27 years and then retired. He has full medical benefits and receives $2,700 per month. He has been receiving those benefits for 22 YEARS!
America’s Mutual Funds and Bond Funds better start looking under the blankets for the potential liabilities of these huge social programs ingrained in these large companies and begin to divest themselves of these companies, or the Dot com collapse is going to look like a picnic in the park compared to the bankruptcy of these giants.
On behalf of the workers that slaved away at these companies for decades, I don’t know what is worse, being promised that you will be taken care of FOREVER or being told that you better plan for your own future after you leave. If and when GM goes into chapter 11 how many of these hundreds of thousands of folks will have their retirements and medical plans done away with? Why have the Unions not been insisting that these funds be set aside and lowering their expectations?
The Unions do not have the power in this system to insist on anything their lucky to have a job with China on the heels and the court system backing everything it's a wonder their still around ronnie set the pace with air traffic controlers and it hasn't let up since
“The Unions do not have the power in this system to insist on anything”
Wayneme
Obviously this is not so. I don’t think GM gave away those huge pension and medical obligations to their people just so their employees would not go to work for Ford.
The reason there is a Pfizer guy on the board is that the GM HMO is the largest buyer of Viagra from Pfizer of all of its customers, who got that approved?
I what I am saying is that once the UAW contracts were negotiated why did the unions not make sure the money was set aside for future pay outs?
As to the China issue I really don’t think ANY Americans care about how China does one way or another, but then again who is going to buy the Federal debt from the social programs that are out of control.
The fact is that many are going to have to go on a financial diet it looks like the retired car people will be forced to it.
WASHINGTON (AFP) - The Federal Reserve (news - web sites) sounded the alarm over inflation with rising oil prices hitting US consumers where it hurts them most -- at petrol pumps.
For the first time in years, the US central bank signalled at the latest meeting of its policy-making forum that price pressures were becoming a pressing concern.
The Federal Open Market Committee (news - web sites) acted as expected in increasing the headline federal funds rate by 25 basis points for the seventh time in as many meetings to 2.75 percent.
But with higher oil prices feeding into record-breaking petrol pump prices in a nation of car drivers, the Fed revealed some anxiety about the impact on consumer inflation further down the line.
The FOMC stuck to its balanced line that monetary policy will remain "accommodative" and that rate hikes will be "measured". But analysts said it had opened the door to more aggressive action in the months ahead.
"Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident," the FOMC said.
IXIS CIB US economist Marie-Pierre Ripert said: "The Fed's assessment on the real economy has not changed significantly but the comments regarding inflation are much more hawkish.
For the first time in years, the US central bank signalled at the latest meeting of its policy-making forum that price pressures were becoming a pressing concern.
The Federal Open Market Committee (news - web sites) acted as expected in increasing the headline federal funds rate by 25 basis points for the seventh time in as many meetings to 2.75 percent.
But with higher oil prices feeding into record-breaking petrol pump prices in a nation of car drivers, the Fed revealed some anxiety about the impact on consumer inflation further down the line.
The FOMC stuck to its balanced line that monetary policy will remain "accommodative" and that rate hikes will be "measured". But analysts said it had opened the door to more aggressive action in the months ahead.
"Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident," the FOMC said.
IXIS CIB US economist Marie-Pierre Ripert said: "The Fed's assessment on the real economy has not changed significantly but the comments regarding inflation are much more hawkish.
"We expect the Fed to continue to tighten its monetary policy at a 'measured' pace in the short run, but it could change this strategy if the risks on inflation continue to rise," she said.
Ripert played down the likelihood of the Fed switching to sharper increases in borrowing costs.
But other analysts said the Fed could soon give up on talk of "measured" rate hikes, and so had issued its tough words on inflation now to ensure the markets are prepared.
They noted that the Fed was no longer talking about moderate growth in the world's biggest economy but rather of a "solid pace".
And the FOMC statement delivered the important caveat that only "appropriate monetary action" would keep risks to both growth and inflation balanced.
"The Fed noted a pickup in recent inflation pressures and the tone, after repeating 'measured' rate hikes, provides a bias for faster versus slower rate hikes in the near future," Societe Generale economist Stephen Gallagher said.
"These descriptions denote a bias that 'measured' may not be sufficient in the future to contain pressures," he said.
Robert Pavlik, portfolio manager at Oaktree Asset Management, said the Fed was likely to change its policy stance at its next meeting in May.
"The Fed will have more information at its disposal on commodity prices and removing the statement will allow the Fed more leeway to adjust interest rates moving forward," he said.
The Fed met just after news that US wholesale prices rose 0.4 percent in February, led by a surge in energy prices. The core rate for the producer price index, which excludes volatile food and energy costs, went up 0.1 percent.
The markets have taken comfort in the fact that strong US PPI (news - web sites) numbers have not yet fed into rising consumer prices, the sharp end of inflation. Intense competition, especially in the jobs market, has kept inflation moderate.
Merrill Lynch chief economist David Rosenberg said the Fed had taken a "half step towards a more aggressive move on the interest rate front".
"The Fed has not signaled a 50 basis point move at either of its next meetings, but certainly is willing to make a move if inflation does not stay contained," he said.
Comments
When the 10K’S come out and the company says it is not putting back enough money for pensions why are the Unions not screaming to the Press?
Hoffa knows oops knew
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Here is a question I keep coming back to, for decades we have had very strong Unions in this country. >>
In the 60's and 70's, this would have been the case, but most union's memberships has been dropping and they have given up most of their strength to strike since the 70's. You'll have to blame the pension problem on business.
http://sg.news.yahoo.com/050119/1/3pyjn.html
Tom
Shades of the Dollar Standard
by Hans F. Sennholz
If the love of money is the root of all evil, the depreciation of money must be the mainspring of all shams and frauds. It works silently and covertly, impoverishes many while it enriches a few, and thereby inflicts great harm on social cooperation and international relations.
A few economists are sounding the alarm about the decline of the U.S. dollar. In recent months it fell visibly toward the euro and Japanese yen and is likely to fall even lower. But most Americans refuse to be alarmed as they are unaware of exchange rates and foreign exchange markets. Why should they be troubled about the financial affairs of money traders and dealers?
We may not be able to see the future but always can learn from the past. Looking at the recent history of the dollar, this economist perceives three distinct stages with various characteristics, causes, and consequences. In the first stage from the end of World War II to 1971 the U.S. dollar was tied to a small anchor of gold. President Nixon cut its ties and embarked on a wholly new road of fiat dollar management. Many other countries readily accepted the new system acclaiming its flexibility and manageability. At this time, in 2004, the world is still traveling this road, but several countries are making preparations for leaving it and proceeding toward a multiple standard system. It is not clear whether they will depart in an orderly fashion or in crisis and contention.
The U.S. dollar has been the dominant world currency for some 60 years. At the Bretton Woods international conference in 1944 it was elevated together with the British pound sterling to the position of "reserve" currency in which international payments could be made. It was to be backed by gold and redeemable at $35 an ounce and sterling be made readily convertible at $4.03 to the pound. With the Labour Party in power pursuing a vigorous program of nationalization of industry and extension of social services, the pound soon suffered frequent bouts of confidence; it was devalued to $2.80 in 1949 and to $2.40 in 1967. Issued in ever larger quantities and fettered by stringent regulations and controls it gradually lost its position as reserve currency.
The U.S. dollar, in contrast, displayed great strength and was traded at parity with gold. The recovery of European and Japanese economies from the ravages of war increased their demand for a reserve currency, the U.S. dollar. But soon after sterling had lost its reserve position, the integrity of the dollar opened to doubt and controversy. In the footsteps of the British Labour Party, the Kennedy and Johnson administrations pursued policies of economic and social reform, incurring growing budget outlays. President Johnson not only declared "war on poverty" in order to create a "Great Society" but also escalated American participation in the Vietnam War. His policy of both "guns and butter" built on deficit spending and abundant credit by the Federal Reserve.
In 1968 when the budget deficit reached World War II proportions, the system came within an inch of disintegrating. U.S. balance of payment deficits and loss of gold cast doubt on U.S. solvency. In 1959 the U.S. gold stock had still exceeded $20 billion. It fell sharply to $13 billion in 1965 and 1966, and now touched $12 billion, barely one-fourth of foreign payment obligations. But President Johnson managed to buy time with a stopgap arrangement, involving a two-tier pricing system for gold. The world's central banks agreed to make payments at the fixed price of $35 an ounce while all individuals could trade gold freely at market prices. And in order to enlarge the world's currency base, the International Monetary Fund (IMF) was empowered to issue Special Drawing Rights (S.D.R.s). There was widespread agreement among monetary authorities that the influence of gold needed to be diminished.
While the Federal Reserve was busily increasing the dollar base and the U.S. government was pursuing both wars, President Johnson decided to take corrective action at home. In old Mercantilistic fashion, his administration imposed a new tax on the purchase of foreign securities by Americans. It hesitated to raise income taxes but chose to "jawbone" the people. It ordered American businessmen to reduce their investments in foreign operations and asked American banks to limit their loans to foreigners. The Federal Reserve even raised its discount rate from 4 to 4½ percent, which barely covered the inflation rate.
When President Nixon took office in 1969 he immediately tried to slow down the galloping inflation by vetoing much new social legislation and impounding funds for domestic programs which he opposed. When the country fell into a recession and unemployment climbed to six percent of the work force, he responded with new pump priming. In 1971 and 1972 the Federal budget headed for the largest deficits since the end of World War II. Even the balance of trade fell deep in debt, and the chronic deficits of the balance of payments filled the vaults of many foreign central banks with dollars.
The year 1971 was to be a landmark in monetary history. On August 15, the United States government removed gold as the foundation stone of the international monetary order and rescinded the international agreements that had defined the system since the end of World War II. In a nationally televised address President Nixon simply announced that the United States would no longer honor the 36-year-old commitment to pay international obligations in gold at the rate of $35 an ounce. He imposed a 10 percent surcharge on imports into the United States. And above all, he ordered virtually all wages and prices to stop and freeze. Violators would be fined, imprisoned, or both. When management of the controls proved to create frustrating problems, it underwent four "phases" of adjustment to "problem areas" such as food, health care, and construction.
The Bretton Woods standard survived neither the Vietnam War nor the war on poverty. It was born of Keynesian thought and buttressed with 18th century Mercantilistic beliefs; it died of basic misconception of human action and behavior. John Maynard Keynes who had helped to deliver the system at the Bretton Woods conference sought to promote employment by government spending on public works. Most governments have applied the Keynesian formula ever since. Old Mercantilistic notions and doctrines found a ready home in the Keynesian economic system, pointing toward favorable balances of trade and greater national productive efficiency through a host of government regulations.
The new fiat dollar standard was a germane derivative of the Bretton Woods order without its limitations. Liberated from any gold reserve requirement or other quantitative restriction, it promised to serve political needs as well as the Keynesian requirements for employment and growth. Unfortunately, it proved to be even less stable than its harbinger, more inflationary and, above all, more divisive and injurious to American reputation and prestige.
The fiat dollar standard has profoundly affected the economic lives of most Americans. Soon after the dollar's convertibility into gold was rescinded the Federal Reserve accelerated its money creation. While stringent controls were preventing goods prices from rising, the eurodollar, that is, U.S. currency held in banks outside the United States and commonly used for settling international transactions, commenced a steep slide and U.S. trade deficits grew very large. They obviously reacted in anticipation of ever more dollar inflation and depreciation; money markets tend to anticipate future prices of goods and services. Mutual exchange ratios between currencies tend to be determined by their foreseen purchasing power; they always move toward purchasing-power parity where it no longer makes any difference whether one uses this or that currency.
Withdrawal of American troops from Vietnam did not end the price and wage spirals that were to mark the presidencies of Messrs Nixon, Ford and Carter. The Federal Reserve duly supplied funds at single-digit discount rates, bank credit expanded at double-digit rates, the U.S. Treasury suffered ever larger deficits, and goods prices soared. The Fed occasionally would "tighten" its reins but "real" interest rates always remained relatively low or even below the rates of inflation. U.S. trade deficits increased erratically with dollar funds flowing to Western Europe and Japan. Their support sustained the U.S. But the trade monetary authorities in Europe and Japan were determined to defend the existing dollar parity with substantial purchases of dollars deficits and their own surpluses, which meant to bolster and subsidize their own export industries. The abundance of dollar funds in central banks throughout the world then facilitated an explosive growth of money and credit in most industrial countries.
In 1974 and 1975 the fever of double-digit inflation was briefly eclipsed by the chills of recession. Unemployment rose to 8.3 percent, a 33-year-high nationally, and much higher in construction and manufacturing. It remained high although the chills of recession soon gave way again to the fever of inflation. Money and credit were made to expand again at double-digit rates, trade deficits set new records, and the U.S. dollar deteriorated further in international markets. By the end of the decade the country fell again in the grip of the twin economic evils of recession and inflation. Unemployment rose again while GNP was falling. This time, the Federal Reserve, under new management, meant to call a halt to the turmoil. It raised its discount rate to 12 percent, the prime rate rose above 15 percent, and the eurodollar rate to 20 percent. President Carter even imposed Federal temperature controls in public and commercial buildings, setting minimum summer temperature at 78 degrees and maximum winter temperature at 65 degrees. Many Americans keenly felt the effects of gasoline rationing, waiting in long lines at gasoline service stations. Legislators and regulators had a ready explanation for the crisis: the sheikhs and emirs of OPEC had done it again.
In 1981 President Reagan took the helm of a deeply troubled country. During his eight years in office he managed to lift the spirits, changing the course and relaxing the reins of government. He rolled back the Johnson Great Society but preserved the Roosevelt New Deal. He rejected Keynesian formulas for managing economic demand and instead followed "supply-side" prescriptions which aim to stimulate production and investment by way of tax reduction and removal of some government controls. Mostly at loggerheads with Congress, he insisted on rearming the country and confronting Soviet aspirations. He steadfastly resisted Congressional efforts to boost taxes significantly. With Congress raising social spending and the President expanding military outlays, Federal budget deficits soon exceeded two hundred billion dollars a year; the national debt doubled in seven years.
With the discount rate at 12 percent the quantity of money and credit finally stabilized, allowing the economy to readjust to actual market conditions. A 25 percent Federal tax cut over three years brought some relief to business but tore big holes in the Federal budget and capital market. After the removal of price controls the dollar regained some strength and the American economy became again the engine of the world economy. It slowed down after a spectacular Wall Street crash in 1987 which reflected the international concern about the budget deficits and the chronic trade and current account deficits of the United States and the surpluses of Japan and West Germany. In ages past, the creditors would have demanded prompt payment in gold, which would have forced the debtor to mend his ways or face insolvency. The fiat dollar standard merely prompted contentious diplomatic exchanges – the creditors pressing the debtor to live within his means and the debtor urging his creditors to relax and stimulate their own economies with easier money, larger budget deficits, or both.
The decade of the 1990s was akin to the 1980s. It began with a recession, saw new acceleration followed by deceleration and a "soft landing" in 1995. Great concern about the large balance of payments deficits of the United States led to a sharp decline in the value of the U.S. dollar, especially versus the Japanese yen and the Deutsche mark and other European currencies closely tied to it. Coordinated intervention by foreign central banks was needed to stabilize the dollar. It rallied for a while when several Asian currencies foundered in 1997. Large current-account deficits led to sudden declines and devaluations of the Thai baht, the Malaysian ringgit, the Indonesian rupiah, the Philippine peso, the Singapore dollar, and the South Korean won. The International Monetary Fund (IMF), working in cooperation with industrial countries, kept the Asian crisis from spreading.
Throughout the 1990s the Federal government suffered massive deficits although political spokesmen frequently boasted of budget surpluses. In 1998, 1999, and 2000 the Clinton Administration waxed eloquent about its surpluses which in time would retire the national debt. In reality, the surpluses were deficits financed with Social Security money and other government trust funds. They increased the national debt with Social Security IOUs as much as Treasury bills, notes, and bonds sold to investors; payment obligations to Social Security beneficiaries are as binding as those to investors.
--------------------------------------------------------------------------------
Throughout the decades a few economists always were worried about the magnitude of the trade deficits and the vulnerability of the American dollar. But their fears proved to be unfounded because they underestimated the worldwide demand for dollars and the willingness of foreign investors and central bankers to trust and hold U.S. dollars. After all, until recently the deficits never exceeded three percent of GDP and Americans still were net creditors in their foreign accounts. By now, in 2004, the dollar standard has reached a stage in which not only a few economists but also some foreign creditors are beginning to question its future. The Federal government is swimming in an ocean of debt. In its first term the Bush administration increased the Federal debt by $2.2 trillion. Congress raised the Treasury debt ceiling three times, by $450 billion in 2002, by $984 billion in 2003, and by another $800 billion on November 19, 2004, to $8 trillion 184 billion. The ready willingness of Congress to finance such deficits is a clear indication of the political and ideological mold and make of most members of Congress and the public that elects them.
Foreign observers are drawing similar conclusions. The Bank of Japan with more than $800 billion in dollar obligations already announced its reluctance to increase its holding. China with dollar reserves exceeding $500 billion is laboring under "unsustainable U.S. trade deficits." Asian banks altogether holding more than $2 trillion in American obligations are suffering hundred-billion dollar losses in terms of purchasing power. It is not surprising that the central banks of India and Russia as well as some Middle East investors have begun to sell dollar obligations.
According to some estimates, foreign banks and investors are holding some $9 trillion of U.S. paper assets. They are owning some 43 percent of U.S. Treasuries, 25 percent of American corporate bonds, and 12 percent of U.S. corporate equities. They obviously are suffering losses whenever the dollar falls against their respective currencies; even if they are pegged to the dollar they are incurring losses against all others that are rising.
The dollar standard surely would enter its third and final stage of disintegration if its holders would panic and start selling their American paper investments – their U.S. Treasuries, U.S. agencies, and corporate bonds and shares. The crash would be felt around the world and neither foreign sellers nor American authorities could be trusted to react rationally in the fear and noise of the crash. The scene could be similar to the political bedlam of the early 1930s.
There always is the hope that the primary creditors will act in concert and once again bail out the debtor. The European Central Bank, the Bank of Japan, the Bank of China, and the Bank of England may decide to avert the unthinkable and support the dollar by mopping up huge quantities. The mopping would stabilize the situation once again by inflating and depreciating their own currencies; they would pass the depreciation losses on to their own nationals. Optimists in our midst are hoping for this scenario; they are convinced that the Bush administration will in time save the situation by balancing its budget and the Federal Reserve will allow interest rates to seek market levels. Such a policy would avert the dollar dilemma although it would lead to a painful recession forcing all economic factors to readjust to market conditions.
Pessimists in our midst cast doubt on such a scenario. They point not only to the host of legislators and regulators who cherish their position and power but also to public opinion and ideology which call for government favors. They are prepared to proceed on the present road and brace for the morrow. A few cynics even contend that a government facing a financial crisis of such magnitude is prone to divert public attention from its ominous path by embarking upon foreign adventures.
This economist is ever mindful that debts do not fade or pass away. Individuals must face them, deal with them, or renege in bankruptcy. Governments have an additional option: as the issuers of their own currencies they may inflate and depreciate their debts away. The United States government has done this ever since it cast aside the gold standard and imposed the dollar standard. It undoubtedly will continue to do so as far as the eye can see. It is an iniquitous road which individuals would soon be barred from traveling but governments love to take, shedding their debts one percent at a time. It is a road of the dollar standard designed at Bretton Woods, built by the U.S. government, managed by the Federal Reserve System, and financed largely by creditor central banks in Europe and Asia. It is a road on which the fall in dollar value has inflicted losses on all foreign dollar holders each in proportion to the amount of dollars held. It is the political road of debt default the magnitude of which amounts to trillions of dollars, undoubtedly the largest in the history of international relations. It will be remembered for generations to come.
It is unlikely that the Federal government and the Federal Reserve will soon mend their ways, but it also is doubtful that foreign creditors will continue their support indefinitely. The U.S. dollar is bound to continue to depreciate and gradually surrender its role as the world's primary reserve currency to a multiple reserve-currency system resting on the euro, Japanese yen, Chinese renmenbi, and the American dollar. The multiple-standard system is likely to perform more efficiently and equitably than the dollar standard. Competition would avoid the abuses and inequities of a monopolistic system. Confining the powers of the Federal Reserve System and constraining the deficit aptitude of the U.S. Treasury, it would ward off any further inundation of the world with U.S. dollars.
In idle reverie of years long past, this economist is tempted to compare the gold standard with the dollar standard. Throughout the long history of the gold standard the balance of payments of gold-producing countries was usually "unfavorable." Since the birth of the dollar standard the United States has assumed the position of the gold-producing countries; its balance of payments usually is unfavorable. Much capital and labor were spent to find, mine, refine, and market gold; the United States bears minuscule expense in the production of its money. The quantity of gold coming to market was limited by market forces; the quantity of dollars depends on the judgment of Federal Reserve governors who are appointed by the President. In times of turmoil and war the quantity of gold mined does decline; in such times the stock of fiat dollars tends to multiply and its value depreciates quickly. The quantity of gold is limited by nature and its value is enhanced by many nonmonetary uses; fiat and fiduciary moneys have no such uses or limitations. They are the sorry creation of politics.
January 21, 2005
Dr. Hans F. Sennholz [send him mail] was professor and chairman of the department of economics at Grove City College.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
After our discussions here for nearly two years on coming Social Security and Medicare disasters, the Congress is finally trying to figure some way out of those debt traps.
Washington continues to press the lie that our economy is still showing very little inflation even though the prices of nearly everything go up every quarter, and the Fed raises interest rates at every meeting.
Here is one writers view,
“While my living expenses are going up at 8-10 percent a year, I am constantly told that there is no inflation. Last Friday a Fed governor told the markets that inflation is well contained. There is a dichotomy between what I am told by Wall Street and what I actually experience on Main Street. The media and financial professionals are constantly telling me there is no inflation.
Yet, what I experience in daily life shows me otherwise.
My weekly grocery bill has gone from $200 to over $300 a week in the last three years. That is significant in itself. However, I am only buying for three people versus five people three years ago. My oldest son has gone off on his own and my middle son has gotten married. My weekly food bill has gone up over 50% even though I now buy for a smaller family. My doctor charges me $80 for an office visit versus $60 the year before. My dentist has raised his fees from $45 to $58 for an office visit. It costs me $12 more to fill my gas tank each week and I’m spending $7 a day at the local deli versus $5 a few years ago. My property taxes just went up significantly and my health care premiums are up double-digits. The last time I went to the movies it cost me almost $60 for just the three of us. The cost of the movie was $29.25 the other $30 was for coke and popcorn.”
J. J. Puplava
Again this year much of the World economic news is centered on China, and as these writers point out China again will continue to play an ever-increasing part in our U.S. economy as the next few years unfold.
“After years of slumber, the world's oldest civilization is now on its way to superpower status. In less than 20 years, China has transformed itself from a basically agricultural economy to the second largest economy in the world and the fastest growing one. It's become manufacturer to the world and by exporting these goods; China is building up huge surpluses, which it's using to invest in countries worldwide. China is our second biggest lender and thanks in large part to China; the U.S. has been living beyond its means and going deeper into debt. In essence, this has amounted to a massive transfer of wealth.
China's economy is growing at an annual pace of about 9% and this has been going on for many years. In contrast, the U.S. economy slowed to 3.1%, hindered by its record trade deficit, primarily with China. And there's no sign this will end soon.
With a population four times larger than the U.S., China needs to create more jobs and it'll likely keep doing this because textile restrictions were lifted last month. Since Chinese wages are so low compared to other countries, it's estimated that about 30 million jobs will be transferred to China from other countries and this mega trend is going to continue.”
I would be interested to hear from some of you ways to play the continuing China boom.
One point of interest in the coin area is Chinese Gold proofs. Many of these have mintages of from 500 to 5,000 coins?
<< <i>
I would be interested to hear from some of you ways to play the continuing China boom.
One point of interest in the coin area is Chinese Gold proofs. Many of these have mintages of from 500 to 5,000 coins?
Obviously there are and will be many opportunities to benefit from the economic changes
being driven by the changes in China. Coins are an interesting speculation because of the
huge population and small mintages. A very similar situation is developing in India which
is the world's second largest population (and growing more rapidly than China). This economy
has also been doing very well and the populous has historically been a little more interested
in coins. Many of the mintages of Indian coins are very low and even those made in billions
apparently no longer exist due to heavy attrition in circulation and subsequent melting. Neither
of these countrys' modern coins were widely collected in this country due to the language bar-
ier or domestically because of lack of interest.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Maybe the above is true, but doing basically nothing in 1929 and in 2001 would have left us in better shape than we are now. But I know that REGULATED (manipulated) markets don't work either. They were strongly manipulated in 1929-1934 and that only extended the great depression. Give WW2 and a bunch of $$ credit, for pulling us out, not the socialistic programs of the 1930's. The govt has a hand in nearly every major market out there, including gold. And it doesn't work (also housing, stocks, commodities, bonds, world currencies). Our asset bubbles have been stretched to their limits.
I had a nice discussion with one of my co-workers yesterday who felt that a constant 3% inflation and $600 BILL debt/year is a GOOD thing! And his basic reasoning was that because of our extensive debt and budget deficits, we avoid DEFLATION, which is FAR worse for our economy and country. This is sort of like cutting off your limbs one by one to protect your heart and lungs. Insipid inflation due to the actions of the Federal Reserve System and Central Banking continue to transfer the nation's wealth to those same bankers. I perceive this as far worse than any "deflation." Business cycles have always had a period of some inflation followed by some deflation (recession). The manipulation since 1913 now ensures that these cycles have bigger ups and bigger downs. I don't see how this is "better."
By terrorizing the common man with the thoughts of the bogeyman
(DEFLATION), our political and economic leaders have somehow convinced the majority that INFLATION is a normal and expected result of a growing economy? HUH?? A good thing? You've got to be kidding me! Housing prices constantly rising over the past 30 years is a good thing? 20%/year housing gains is normal and healthy? Why couldn't they have stayed the same?
That would have been good! But coming off the gold standard in 1974 and printing lots of money since then to battle every calamity that popped up, charted us into constant inflationary waters. But the end result of an inflationary cycle, and it will eventually come, is a deflation. And the longer and more pronounced the first cycle, the longer and more pronounced the deflationary cycle. But while the credit lasts, we can all live higher off the hog and feel wealthier....until the inevitable correction.
roadrunner
<< <i>An unregulated free market does NOT work. It didn't work 100 years ago, it didn't work in 1929 and it doesn't work now. People who don't learn from history are doomed to repeat it and are usually Republican.........
Sure sure sure so what WE the people need is to be controlled and manipulated by other people who get paid to do the controlling and manipulating, and even get to steal just about as much of we the people's earnings, thereby forcing us to work much longer in our lives just to pay for the lowlifes who manipulate and control us.
Yeh that's a great idea.
And people who believe this are either republican or democrat as they sure as heck don't believe in the Constitution or freedom or even have a clue as to WHY this place was so unique for nearly 100 or so years.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Housing prices have to rise every year so that homeowners are duped into paying property taxes. If prices were stable, but property taxes and tax rates went up every year..... well that would last about 3 years before homeowners wanted new politicians in office.
As it is, people can brag about how much their house went up - along with everyone else's - and gloss over the taxes.
not to push your buttons but what do you eat for 300 a week i agree with your thoughts but i'm wondering about your food bill lol
<< <i>Gold saint
not to push your buttons but what do you eat for 300 a week i agree with your thoughts but i'm wondering about your food bill lol >>
Why is that funny and where do you live? Someone else paying your bills? I pay $200 ( average) a week at Publix ( it's just my wife and I and 2 cats), plus another 50 bucks at the butcher, and another 100 for "a" dinner out. And we sure as heck aren't living on Boca Grande, we're in Port Charlotte.
I don't think its funny, in fact I think it's quite pathetic that this government needs to steal from "we the people" to subsidize farmers, while importing food from other countries that are grown in abundance right here.
Never in my life did I think my food bills would be greater than my mortgage but they are.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
i buy in bulk half's of beef & chicken's and i have been to new york and europe so i know it can be a lot
but bottom line it's how you buy as well as where
sorry if i offend anyone
up on it a bag of corn chips 3 percent is the corn in it
most items follow the same mark up pop at your local fast food cost them less then the 1 and1/4 cent paper cup it's in
i don't have any answers but you need to look at the problem not the one your thinking all the time
just my thoughts
before they sold out
so i know of what i speak his name was randall
he is from mitchell south dakota ran his local store's under that name
nationally cub foods
check it out frist name ron
I live in New York and my wife's and my food bill for the two of us and our dog runs about $100 week. $300 a week would get me crazy. I admit we try to buy what is on sale and buy more of those items.
Went to the Palm restaurant in New York City last night and ate very well (no lobster though) and on a special occasion, could not spend above $55 a person including drinks and tax.
WAYNEME,
Sorry about the confusion, I agree with you that does seem high to me for a food bill also. This statement was part of the story from J. J. Puplava and I don’t know where he lives perhaps CA.
Crude Oil Prices Rise Above $50 Mark
43 minutes ago Business - AP
By GEORGE JAHN, Associated Press Writer
VIENNA, Austria - Crude oil futures rose above $50 a barrel Tuesday as traders worried about a production cut from OPEC (news - web sites), even though the cartel's president said such a move is unlikely when the group gathers in Iran next month.
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Prices crested amid cold spells in Europe and the United States, concerns about production shortfalls and continued high demand as well as the uncertainties over the strategy of the Organization of Petroleum Exporting Countries.
Light sweet crude for March delivery climbed $1.80 to $50.15 a barrel in morning trading on the New York Mercantile Exchange. The March contract expires Tuesday.
Heating oil futures rose 4.67 cents to $1.396 per gallon on Nymex, while Brent crude was up 57 cents on the International Petroleum Exchange, fetching $47.30 a barrel.
OPEC's wait-and-see approach has rattled traders, said Victor Shum, an analyst in Singapore for Purvin & Gertz, an energy market consulting group.
Julian Lee of the Center for Global Energy Studies in London said uncertainty over OPEC's plans is "having an impact because the market is fundamentally tight."
He said shortfalls from many non-OPEC producers over the past year have added to bullish sentiment, "and on top of that demand growth hasn't slowed down as much as some people expected it to."
These factors, and an OPEC cutback estimated at 600,000 barrels a day for last month alone, "have conspired to tighten the market," he said.
Adnan Shihab Eldin, acting secretary-general of OPEC, has said the group may cut up to 1 million barrels a day. But Nigeria and fellow OPEC member Algeria have suggested no major reductions are needed.
The president of OPEC — also Kuwait's energy minister — added his voice Tuesday to those in the organization against reducing production.
"Until now we don't have to cut, until now the price is very high and we have to respect this price and to cooperate with others for the stability of the market," Sheik Ahmed Fahd Al Ahmed Al Sabah said.
OPEC collectively produces more than a third of the world's crude, and its decisions on raising or lowering output can have a significant impact on prices, especially at a time when global demand remains robust and there's little spare supply capacity.
Shum said traders would remain on edge in the run-up to the March 16 meeting, but he believed there would be no actual cut in supply from OPEC if prices remained above $48 a barrel in the coming weeks.
"Just by talking and keeping people in suspense" OPEC could put a floor under prices, Shum said, adding that he expected crude to trade between $45 and $50 a barrel over the coming months, barring an unexpected shock.
Vienna-based OPEC comprises Algeria, Iran, Iraq (news - web sites), Indonesia, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. At present, however, Baghdad does not participate in its output pacts.
___
On the Net:
http://www.opec.org
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>A very short time ago, $30.00 oil seemed high, now we've accepted $45.00 oil as the norm. This can't help but effect the US economy negatively, not saying anything about the lifestyle that Americans have come to expect. If I had large interests in the financial well being of oil companies, I'd feel down right presidential about these changes. >>
Yeah...It's Bush's fault.....LOL
Knowledge is the enemy of fear
more and more sense. The need for such alternate fuels is economic, strategic
and in the interest of national security. We must become self relient for fuel or
we will be in a pretty fix in a little while. I would spend 50 billion dollars to research
and find an alternate , abundant and cheap substitute, which would be readily available
within the USA. Such an investment will pay off in less then 5 years. Fresh water, food
and cheap, available and secure sources of fuel are the three items over which wars have
been fought and will be fought in the future. We must break free from economic blackmail.
Camelot
In an interview with Boone Pickens and several other oil experts over the weekend they all agreed that we would see $60 oil before we saw $40 oil again.
“The need for such alternate fuels is economic, strategic and in the interest of national security.”
Bear,
We already have many other alternate fuel sources and delivery systems, but our economy could never stand the shock of massive conversion. In the late 1980’s I,and some others, developed a plan for Texas to convert vehicles to use natural gas. We developed a public company, got legislation through the Texas house and senate, and all State and County vehicles were to be converted by no later than 1998. We built several fueling stations in Texas and converted many cars and trucks. When we went to the capitol markets, the investment bankers in Austin wanted only Dot Com deals, and the big oil companies, as well as the auto manufactures did everything they could to drive our small company into bankruptcy, which they did by 1995.
I had one of the first pick-ups in the state that ran on compressed natural gas and gasoline. If your natural gas ran out you just flipped a switch on the dash and went back to gasoline. We could not believe how the powers that be came down on us. A real missed opportunity for our State.
I thought I would write a quick note on the new Readers Digest report on current American credit card debt. This is really overwhelming. Their staff research people have just finished and reported the following stats.
“Americans bought over $2 trillion dollars worth of stuff on their credit cards last year.
Current outstanding debt on credit cards is $700 billion dollars, this is the part we did not pay off. This is up from $50 billion in 1980.
3 of every 5 Americans cannot pay off their credit cards each month, and their balances run an average of $12,000, which is one forth of the medium annual household income.
Senior Citizens once noted for their frugality are sinking deeper into debt. Their average credit card debt is up 89% from 1992 to 2001.
Total consumer debt averages $7,100 per person currently in the U.S. not including mortgages.
In 2003 Banks mailed out 5.2 Billion offers for credit cards!!
The average college student owes $2,800 on their credit cards.”
Unlike our government which can just print the debt as long as some foreign country will buy it, what happens to the economy when things get to the point that individual folks just can buy no more, or can never pay off what they owe?
Debt Slavery
Rates like that used to be called loan sharking and prison sentences were given out. Now corporate America can lock in the little people to a life of interest rate slavery. Of course they could always get a payday Advance loan if they need to eat, borrow 100 pay back 150 in a week.
Now we know why Organized Crime has declined in America. Alchohol Sales, Loansharking and gambling are now all controlled by major corporations. If Al Capone was alive today he would be a CEO.
Short term fix of course, INFLATION.
<< <i>Although it may seem outragous that America should have such huge personal debt it really is part of the overall plan. Why else would Congress be moving so fast to rewrite the bankruptcy laws to be sure that those with 29% interest loans are never let off the hook.
Debt Slavery
Rates like that used to be called loan sharking and prison sentences were given out. Now corporate America can lock in the little people to a life of interest rate slavery. Of course they could always get a payday Advance loan if they need to eat, borrow 100 pay back 150 in a week.
Now we know why Organized Crime has declined in America. Alchohol Sales, Loansharking and gambling are now all controlled by major corporations. If Al Capone was alive today he would be a CEO.
Short term fix of course, INFLATION. >>
Keep in mind though that they are compensating for overcharging on interest
by paying less than 1% for the money they loan.
By The Texas Hedge
Todd Stein & Steven McIntyre
March 08, 2005
The condition of the U.S. Dollar is perhaps one of the least thoroughly reported on topics in the press today. Sure, you will read the daily article rehashing a load of ambiguous language uttered by some central banker or government official. And you may even come across the occasional news story of how a particular currency's movement has affected an industry such as tourism or textiles. But what you will never read about is the vicious clandestine battle being waged by various governments and interest groups around the world.
Because the U.S. Dollar acts as the world's reserve currency, any sudden drop or rise in its value creates winners and losers. And if the status quo (in terms of the Dollar's value) is achieved, yet another list of winners and losers is produced. This is why politicians and government officials would prefer to downplay the issue altogether - no need to make new enemies. That being said, the Dollar's drop over the last few years is slowly creeping into the national debate. What is fascinating about the topic of the Dollar is how the issue cuts across party & international lines and creates a series of strange alliances.
While farmers, manufacturing companies and exporters have traditionally lobbied for a weak Dollar, labor unions have started to echo this sentiment as they see manufacturing jobs shifted to less developed nations. Politicians in textile-producing districts have been quite vocal when it comes to the issue of China revaluing their currency. The theory is that a stronger Yuan (ergo a weaker Dollar) will make the environment between Chinese laborers and American factory workers more competitive. However, this argument is flawed because anything short of a six-sigma revaluation would do nothing more than make a tiny dent in China's competitive advantage where labor costs run at a fraction of the cost of the U.S. work force. Moreover the Chinese government does not want to see its unemployment rate shoot up, especially since there are so many unemployed migrants as it is. So the bottom line is that the Chinese Communist Party will continue tolerating commodity price inflation (as a result of its artificially low Dollar peg) rather than face waves of angry unemployed citizens.
Aligned with the anti-weak-Dollar Chinese are the Europeans, importers such as Wal-Mart, and creditors including large money center banks. Any Dollar depreciation against Asian currencies means higher prices for Wal-Mart which would hurt sales and margins. Continued Dollar depreciation against the Euro makes European exports less competitive. Hearing a European government official complain about the Dollar is more common today than ever. Finally, the large money center banks on Wall St. are overwhelmingly in favor of a strong Dollar. These banks are creditors and the last thing they would like to see are their loans being paid back in weaker Dollars. More importantly, a Dollar crisis would spell trouble for U.S. assets including corporate bonds and equities. And any softening of demand for Wall St.'s securities must be avoided at all costs in their eyes.
One last constituency who has a major stake in the future of the Dollar is the average Joe Six Pack. But his position is contradictory. On one hand, being the over-consumer that he is, Joe loves a strong Dollar because he can buy his plasma screen television at a good price. And because the strong-Dollar environment has created low interest rates over the last decade, Joe can finance his new purchase at rock-bottom rates. On the other hand, Joe is in debt up to his eyeballs and doesn't know how he'll ever be able to pay off his credit cards. Dollar weakness would help inflate Joe's debt away over the coming years with minimal pain.
So who will win and who will lose? Warren Buffett, one of our investing heroes, has just come out with his most recent annual letter where more than two full pages are devoted to warning his readers about America's alarming trade deficit. He points out that the "force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily" and that America's trade policies are turning it into future a "sharecropper's society". Buffet, who blames both political parties for our current situation, has made a large bet against the U.S. Dollar ($21.4 billion in foreign exchange contracts at year-end spread among 12 different currencies). It's hard to argue with a man who has $40 billion reasons to think he is right. Over the long run, we agree that absent large changes in trade policies, the U.S. Dollar is toast.
March 08, 2005
Todd Stein & Steven McIntyre
Texas Hedge Report
Texas Hedge
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Thanks for your post of this very interesting article, Debt Slavery .I think this absurd new bankruptcy bill has now passed with by-partician support.
I am sure we will not have debtors prison right away, but perhaps work farms for repayment of credit cards are on the way.
One of the things that I really wonder about is why this bill was not a choice
Philabuster by the Dems?
At one time many years ago we had a usury law in my state of Texas but it was a democrat that got rid of that protection for our folks here?
This is truly pitiful?
I am not saying that debtors should have no responsibility, but to blanket all situations is absurd.
“Congress seems determined to make sure that individuals enter the world of Debt Slavery and want the courts to be the collection agency. Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement. (Surprisingly, these new bankruptcy laws will still allow corporations to stiff their creditors. Indeed, how could "The Donald" afford to buy and/or maintain his mansions without stuffing his junk bond holders with his casinos in Atlantic City?) Debt Slavery is a cornerstone of the Ownership Society. Why? Because now the bank owns you!”
roadrunner
I don't see the spending slowing down any however. Not by government anyway.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Uh...Al Gore lost the election. Thought you new.
Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement.
Well dam, next thing is they'll expect people to work in order to be paid.
Somebody put a stop to this madness.....
<< <i>Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be "sucked out" of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement.
Well dam, next thing is they'll expect people to work in order to be paid.
Somebody put a stop to this madness..... >>
Well certainly if you were referring to the amounts this government steals from us and spends without so much as a consultation.
Putting a stop to that would be nice but it's not going to happen.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Anyone watch the dollar today?
Tom
Five years after Nasdaq bubble burst, questions hang over Wall Street
Wed Mar 9, 3:10 AM ET Top Stories - AFP
NEW YORK (AFP) - Five years after the bursting of one of the biggest stock bubbles in history, analysts say Wall Street and the tech sector are in good shape -- but that it will take a long time to get back to the lofty levels of 2000.
Amid a tech-sector frenzy, the Nasdaq composite index surged to an all-time closing high on March 10, 2000, of 5,048.62, a level that Wall Street veterans say will take many years to reach again.
The Nasdaq -- dominated by technology stocks and dubbed the "new economy" index at the time -- ended up falling 78 percent from its peak to 1,114.11 on October 9, 2002, in the worst collapse for a major US stock index since the Great Depression.
The dot-com mania of the late 1990s lured millions of investors in what analysts say was a classic bubble, although many refused to acknowledge it at the time.
The Nasdaq surged 86 percent in 1999, only to see those gains evarporate the following year in one of the worst bear markets ever.
"I've been a full-time student of the market for 45 years, and I've seen a lot of bubbles, but the biggest bubble I've seen was the high-tech Internet bubble," said Alfred Goldman, chief market strategist at AG Edwards.
"But as a famous prizefighter once said, the bigger they are, the harder they fall."
Peter Cardillo, market startegist at SW Bach, said it was hard for Wall Street professionals to dissuade people from jumping into the market with dreams of getting rich.
"I distinctly remember being on the phone from 5:30 in the monring to 8:30 at night, and many young people calling me on the phone, children at school wanting to buy technology stocks," Cardillo said.
"Young kids, instead of watching cartoons or baseball, were watching the stock market."
Cardillo said he and others tried "to sound the alarm" that stock prices were moving too fast, "but how could you fight it?"
In the end, Cardillo said, "most people got burned," especially small investors, many of whom had socked away money in retirement plans.
The speculation was fiercest in the tech sector. Other market indicators saw a sharp correction, but the blue-chip Dow Jones Industrial Average has returned to within striking distance of its all-time high of 11,722.98. And the Standard and Poor's 500 is not far from its record high of 1,527.46.
But the Nasdaq, despite a sharp rally from its 2002 lows, was struggling to get to 2,100, and would need to more than double its value to get back to the peak of five years ago.
"Clearly in hindsight, it was a bubble and very often it does take some time to reach the previous peak," said Scott Brown, chief economist at Raymond James and Co.
But Brown said that technology company fundamentals appear "more promising" now.
"There was a bubble element in Internet, but if you look at capital spending now ... the recent trends are very promising. The technology wave was real. The new technologies gave us greater efficiency."
Goldman said investors may have learned a lesson from the collapse, but that does not mean more bubbles won't occur, noting that real estate and the bond market have been showing heady gains.
"It's just human nature," Goldman said. "We now have a feeding frenzy in the energy sector. When you get these bubbles, they go higher than anyone anticipates and when they fall they go lower than anyone anticipates. The good news is the overall market is reasonably priced."
Still, the analysts say investors should not expect to see the Nasdaq at 5,000 again any time soon.
"I don't think we're going to see that for a long time," Cardillo said. "I think the chances of seeing Nasdaq at 5000 in next 10 years are nil or next to zero."
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Dollars and dollar related instruments?
Tom
Oil Prices Soar Above $57 on Supply Fears
1 hour, 4 minutes ago Business - AP
By BETH GARDINER, Associated Press Writer
LONDON - Crude oil futures prices soared above $57 a barrel for the first time Thursday after OPEC's pledge to increase output failed to assure traders who were worried about tight supply.
Light, sweet crude for April delivery rose 78 cents to $57.24 a barrel on the New York Mercantile Exchange by afternoon in Europe, after reaching as high as $57.50. The previous intraday high, set in October, was $55.67 a barrel.
Heating oil rose more than 2 cents to US$1.6145 a gallon.
Brent crude also reached new highs, hitting $56.15 a barrel before edging back. In afternoon trading it was up 83 cents to $55.71 on the International Petroleum Exchange.
In a monthly report released Thursday, the Organization of Petroleum Exporting Countries warned that economic growth in the United States, China and Japan would push demand for its oil even higher in the second half of this year. It also said it was unclear what impact the resulting price increases could have.
"Oil prices rose further in March and the capacity of consumers and companies to absorb such increases is a further uncertainty," OPEC said.
OPEC members meeting in Iran (news - web sites) on Wednesday agreed to boost the group's output quota by 500,000 barrels a day, or 1.9 percent.
The market was unimpressed with the decision, because members of the oil cartel who are supposedly bound by its production quota are already exceeding the previous ceiling by about 700,000 barrels a day — meaning no extra supply will actually be added.
OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah also said the additional barrels may not come until May, since members are already supplying more than planned.
"This is not about lowering prices. It's about stopping them skyrocketing," Yasser Elguindi of New York-based Medley Global Advisers said on the International Oil Daily Web site. "We are going to be either side of $50 with spikes to around $60."
Bruce Evers, an analyst with Investec Securities, said traders are convinced the announcement "won't be enough and it's going to leave the supply side of the equation very stretched."
With capacity so tight and demand expected to increase later in the year when winter hits, an unforeseen supply disruption — like a bad hurricane season in the Gulf of Mexico or political instability in Nigeria or Venezuela — could send prices even higher, he warned.
"Sixty (dollars a barrel) is question of when, not if," Evers said.
Simon Wardell, an analyst with the Global Insight consulting group, said "this is definitely a structural price change" driven by demand outpacing supply.
China, the world's second-biggest oil consumer after the United States, is already guzzling more than a third of the world's crude supplies. Chinese fuel use will rise 7.9 percent this year, or 500,000 barrels a day, to 6.88 million barrels a day, according to the Paris-based International Energy Agency.
The agency said last week it expects petroleum needs this year to increase 2.2 per cent, by 1.81 million barrels a day, to a new daily total of 84.3 million barrels.
Wardell said OPEC was producing almost all the oil it can pump. That means the upward price trend is unlikely to reverse unless demand slackens significantly, "which would mean a fairly sharp drop in economic growth," he warned.
Crude futures shot up more than US$1 a barrel Wednesday after the latest petroleum supply report from the U.S. government showed a sharp decline in domestic supplies of gasoline and heating oil last week.
In its report for the week ending March 11, the Energy Information Administration said gasoline stocks fell by almost three times more than expected, by 2.9 million barrels, to 221.4 million barrels, compared with consensus forecasts for an increase of 800,000 barrels.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Now our car companies are beginning to look like our airlines.
What happens to the coin market if our country has losses like this?
By Jason Hommel
“On March 15th, 2005, (the ides of March) we may have just witnessed the beginning of the death of our financial system as General Motors stock took a nosedive from $34/share down to $30.
http://finance.yahoo.com/q/bc?s=GM&t=5d&l=on&z=m&q=l&c=
It does not seem like much (GM down just over 10% in one day), but as of March 17th, the stock is down to $28.35, and the market cap is down to $16 billion. (GM is down nearly 18% for the week.) It's the type of volatility that we usually only see in silver stocks!
What does this mean?
GM's stock price decline is like a dagger right into the heart of the U.S. financial system, and the dollar itself!
Why did it happen?
Apparently, someone in power did the equivalent of shouting "the emperor has no clothes" and people woke up, and are beginning to see more clearly! The media decided it was time to expose the truth that GM is nearly insolvent, and will expect to lose $1.50/share in the first quarter alone!
But the story is worse than that! GM has $300 billion in debt http://finance.yahoo.com/q/ks?s=GM
...and has a market cap, now, of $16 billion. See the problem there? The bondholders could buy the company nearly 20 times over if they used their money to buy stock instead of loan it to the company.
The implication is clear--that GM is headed towards bankruptcy, and will default on the bondholders, who will then own a company worth less than $16 billion dollars!
For every one point that interest rates rise, refinancing GM's debt will cost an additional $3 billion in annual interest payments -- money that they clearly do not have! Where is GM going to get another $3 to $6 to $9 billion as interest rates rise by 1%, 2%, and 3% more? Selling cars? Nope. Selling stock? Unlikely in this market! Borrowing more? From who? The U.S. government itself is propping up this bond market, and there are no buyers even for U.S. bonds, and there haven't been for months now!
So, therefore, GM will soon be a $300 billion dollar blow-up!
How big is that? It's bigger than Enron, Global Crossing, LTCM, K-Mart, and the IRAQ war all put together!
$300 billion going belly up is a big enough event to topple the U.S. government! How so? It will shake the confidence in the entire financial system. Companies as big as GM are not supposed to go bankrupt in our "normal" world. They are "supposed" to be "too big to fail".
The value of the "official" U.S. gold hoard of 261 million oz., at $440/oz. is only a mere $115 billion.
See what this $300 billion blow-up will mean? Imagine the financial chaos as a pile of wealth almost three times larger than the current value of the U.S. "official" gold hoard evaporates!
The annual deficit is around $700 billion. How will the U.S. government sell bonds to finance the deficit if bondholders are getting wiped out?
If the government can't sell bonds while running a deficit, then the government must simply be printing money to fund the deficit--and they are, as can be seen in the rate of growth of the money supply, M3! Therefore, inflation is raging, and interest rates must keep pace, which is why GM is doomed!
Interest rates must head up, as confidence in the U.S. dollar bond market will be shaken like a tree in a hurricane!
Foreign nations are all sounding the alarm already that they will be selling U.S. bonds to diversify the holdings of their central banks: Russia, India, China, South Korea, Japan... what major foreign nation is left to buy them?”
Some interesting opinion presented as facts of course... but I'm wondering why the author completely bypasses the issue of GM's preferred stock(s). Preferred stock owners are ahead of common stock holders when a bankruptcy occurs. Does the $16 B market cap include the preferred stock?
Rough numbers only.....
Ford (F)
Market cap = $20 B
Debt = $170 B
Daimler Chrysler (DCX)
Market cap = $46 B
Debt = $99 B
It is not a matter of if, but when. Only thing that has delayed it is the massive liquidity generation authorized by the FED over the past 4 years.
roadrunner
Way to Go!
<< <i>The US auto industry is not in particularly good shape. The airlines already have huge problems.
Roadrunner, if there was real free market competition in the airlines, and I don't even know if such a thing could be possible, US domestic airlines would REALLY be hurting and find themselves having to make giant changes or disappear.
I don't know what European airlines are like to fly, but I'm real familiar with Asian carriers are like having flown almost a dozen times back and forth to Asia not to mention a couple dozen inter Asian country "domestic" flights and there's no comparison between say a US Domestic and a Cathay Pacific, Eva, Singapore Airlines or even a Thai airways or Vietnam Airlines for that matter ( who was just given an ok for direct flights to the US by the way).
The level of quality just isn't there, with our domestics and it's a shame, but, oh well.
So many industries are like that though. On a real light side, I just had a "booster pump" put on my house to increase the water pressure. Not many plumbers even knew what I was talking about when I called, one actually referring me to somone who "does that kind of thing" endquote, who quoted me 700 bucks and finally I asked a contractor friend of mine who is from England who said, no problem, went, bought the pump, came and installed it, done @ $500 bucks. I looked at where the pump was manufactured.
It said Italy, but the box was made in the USA.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Pfizer
Sara Lee
Compaq
DuPont
Eastman Kodak
Northrup Grumman
Proctor and Gamble
Meryll Lynch
roadrunner
Many of these big companies are having, or are going to have, their own internal Social Security and Medicare melt downs.
In the case of GM what is surprising is that this is happening even before their large group of Baby boomers get to the trough.
One of my office associates has a father-in-law that worked for GM for 27 years and then retired. He has full medical benefits and receives $2,700 per month. He has been receiving those benefits for 22 YEARS!
America’s Mutual Funds and Bond Funds better start looking under the blankets for the potential liabilities of these huge social programs ingrained in these large companies and begin to divest themselves of these companies, or the Dot com collapse is going to look like a picnic in the park compared to the bankruptcy of these giants.
On behalf of the workers that slaved away at these companies for decades, I don’t know what is worse, being promised that you will be taken care of FOREVER or being told that you better plan for your own future after you leave.
If and when GM goes into chapter 11 how many of these hundreds of thousands of folks will have their retirements and medical plans done away with?
Why have the Unions not been insisting that these funds be set aside and lowering their expectations?
their lucky to have a job with China on the heels and the court system backing everything
it's a wonder their still around
ronnie set the pace with air traffic controlers and it hasn't let up since
GM - Rick Ackerman article
roadrunner
“The Unions do not have the power in this system to insist on anything”
Wayneme
Obviously this is not so. I don’t think GM gave away those huge pension and medical obligations to their people just so their employees would not go to work for Ford.
The reason there is a Pfizer guy on the board is that the GM HMO is the largest buyer of Viagra from Pfizer of all of its customers, who got that approved?
I what I am saying is that once the UAW contracts were negotiated why did the unions not make sure the money was set aside for future pay outs?
As to the China issue I really don’t think ANY Americans care about how China does one way or another, but then again who is going to buy the Federal debt from the social programs that are out of control.
The fact is that many are going to have to go on a financial diet it looks like the retired car people will be forced to it.
Tue Mar 22, 4:49 PM ET Business - AFP
WASHINGTON (AFP) - The Federal Reserve (news - web sites) sounded the alarm over inflation with rising oil prices hitting US consumers where it hurts them most -- at petrol pumps.
For the first time in years, the US central bank signalled at the latest meeting of its policy-making forum that price pressures were becoming a pressing concern.
The Federal Open Market Committee (news - web sites) acted as expected in increasing the headline federal funds rate by 25 basis points for the seventh time in as many meetings to 2.75 percent.
But with higher oil prices feeding into record-breaking petrol pump prices in a nation of car drivers, the Fed revealed some anxiety about the impact on consumer inflation further down the line.
The FOMC stuck to its balanced line that monetary policy will remain "accommodative" and that rate hikes will be "measured". But analysts said it had opened the door to more aggressive action in the months ahead.
"Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident," the FOMC said.
IXIS CIB US economist Marie-Pierre Ripert said: "The Fed's assessment on the real economy has not changed significantly but the comments regarding inflation are much more hawkish.
For the first time in years, the US central bank signalled at the latest meeting of its policy-making forum that price pressures were becoming a pressing concern.
The Federal Open Market Committee (news - web sites) acted as expected in increasing the headline federal funds rate by 25 basis points for the seventh time in as many meetings to 2.75 percent.
But with higher oil prices feeding into record-breaking petrol pump prices in a nation of car drivers, the Fed revealed some anxiety about the impact on consumer inflation further down the line.
The FOMC stuck to its balanced line that monetary policy will remain "accommodative" and that rate hikes will be "measured". But analysts said it had opened the door to more aggressive action in the months ahead.
"Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident," the FOMC said.
IXIS CIB US economist Marie-Pierre Ripert said: "The Fed's assessment on the real economy has not changed significantly but the comments regarding inflation are much more hawkish.
"We expect the Fed to continue to tighten its monetary policy at a 'measured' pace in the short run, but it could change this strategy if the risks on inflation continue to rise," she said.
Ripert played down the likelihood of the Fed switching to sharper increases in borrowing costs.
But other analysts said the Fed could soon give up on talk of "measured" rate hikes, and so had issued its tough words on inflation now to ensure the markets are prepared.
They noted that the Fed was no longer talking about moderate growth in the world's biggest economy but rather of a "solid pace".
And the FOMC statement delivered the important caveat that only "appropriate monetary action" would keep risks to both growth and inflation balanced.
"The Fed noted a pickup in recent inflation pressures and the tone, after repeating 'measured' rate hikes, provides a bias for faster versus slower rate hikes in the near future," Societe Generale economist Stephen Gallagher said.
"These descriptions denote a bias that 'measured' may not be sufficient in the future to contain pressures," he said.
Robert Pavlik, portfolio manager at Oaktree Asset Management, said the Fed was likely to change its policy stance at its next meeting in May.
"The Fed will have more information at its disposal on commodity prices and removing the statement will allow the Fed more leeway to adjust interest rates moving forward," he said.
The Fed met just after news that US wholesale prices rose 0.4 percent in February, led by a surge in energy prices. The core rate for the producer price index, which excludes volatile food and energy costs, went up 0.1 percent.
The markets have taken comfort in the fact that strong US PPI (news - web sites) numbers have not yet fed into rising consumer prices, the sharp end of inflation. Intense competition, especially in the jobs market, has kept inflation moderate.
Merrill Lynch chief economist David Rosenberg said the Fed had taken a "half step towards a more aggressive move on the interest rate front".
"The Fed has not signaled a 50 basis point move at either of its next meetings, but certainly is willing to make a move if inflation does not stay contained," he said.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Thanks Tom
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