Archive for the ‘The Economy’ Category
Our source for unbiased economic reporting, ShadowStats, released these bullet points. Of course, subscribers get a fuller picture. Nevertheless, what we see below are not the sort of things that drive bull markets in equities higher. So there must be another reason…..
- October PPI Was Hit by Lower Energy Costs
- Imminent Official Recession Signaled by New Leading Indicator
- Broad Economy Never Recovered from Prior Downturn
Watching the precious metals markets recently has been about as exciting as watching paint dry. That does not mean that thing are not happening.
Word has it that George Soros has put $18 million into miners. While that’s a paltry sum for him, he did not build his wealth by making poor investments. So it can be that there’s action under the surface.
No doubt there is a lot going on with physical gold regarding its move from West to East. Let’s face it, if I were sitting on billions worth of dollars and U.S. treasury instruments, I’d be scrambling to hedge my dollar risk the best way I could. If I can figure that out, so can lots of others.
While we wait, we can take a peek at what John Williams of ShadowStats has to say:
- Watch Out for the Dollar
- October Annual Inflation: 1.0% (CPI-U), 0.8% (CPI-W), 8.5% (ShadowStats)
- Retail Sales Gain Was Statistically Insignificant; Recession Signal Remained Intact
- Official Real Earnings Declined in October
- Existing Home Sales Declined for the Month; Annual Growth Slowed Markedly
Nothing there to support the idea that we’re in a robust recovery. Maybe the current highs in the stock indices is just so much money sloshing around — before it finds somewhere else to go?
That you should consider starting a small business remains one of my top recommendations. Maybe it’s from stories from my grandparents who lived through the Great Depression. Like when my grandfather was laid off he made money to keep the family housed and fed by wiring farmhouses — even though they lived in the city. Apparently he had the foresight to take classes in electricity before the economic crisis struck.
There are a lot of options — and a lot of scams, unfortunately. You really need to take out a pencil and paper and start making a list of the things you could do. I know someone who goes to estate sales and buys sets of plates, then sells them one at a time on eBay. Personally, I’ve gone back into photography, a hobby-turned-business that worked very well for me when in college. Don’t expect overnight riches, just build an extra income stream. Ideally it will be very low in overhead and have flexible hours.
There are a ton of very inexpensive Kindle e-books that describe various money-making methods. Just keep in mind that there are a lot of unworkable plans. Happily, you can read reviews of the e-books or other books you might want to check out on Amazon to help determine of the book you looking at is helpful or a dud.
Don’t wait until the bottom falls out of this economy. We don’t know for sure when it will happen, how deep the decline will be, nor the duration. But I’ll be very surprised if we aren’t talking recession in 2014 like we were in 2008 — only worse.
Blame it on the educational institutions. Or the media. Or indifference. Or political disinformation campaigns. No matter. The simple fact is Americans, as a whole, don’t get it when it comes to what’s dead ahead economically for our once prosperous nation. But will they ever get it? The answer is supposed to be, “They’ll get it in the end.” I’m not so sure.
In once sense, the effects of decades of increasingly irresponsible fiscal management at the national, state, and local levels will be felt by most all Americans at some point. In other words, they will get “it” in the end. The question is what is the “it” that they’ll get. What meaning will they assign to national economic hardship? Will they understand that reckless printing of fiat dollars to cover wild spending always ends in disaster? Will they learn that a nation cannot spend itself into prosperity? Or will they just find or be provided with some convenient scapegoats to blame? That last conclusion while being wrong is also dangerous. See Weimar Republic and subsequent political events.
Poor education or lack of quality information just results in people making block-headed decisions. We do it all the time. But when a tradition of ignorance of the factors that lead to a prosperous society become ingrained in a population over many years, the result is disaster via jumbo-sized block-headed decisions by investors and self-serving decisions by politicians to mention only two groups. The economy gets distorted. People have unrealistic expectations. Politicians make promises that only their successors will eventually have to break.
Are we at one of those points when Americans will be confronted with some very unpleasant economic truths? If not, we’re getting very close. And the truth will be out there. But, sadly, I doubt many will “get it.” I hope I’m wrong.
It’s interesting how the markets can give the appearance of being calm when there are profound forces building. You just have to look a little deeper.
Like China buying up 25% of world gold production. Like nations looking for ways to diminish the use of the dollar in international trade such as what appears to be going on in Saudi Arabia. Like the US running astronomical deficits with fewer folks willing to scoop up any more US treasury instruments.
Any one of these potential triggers — and many we’re not even aware of — could go off at any time setting up a cascading series of financial calamities that might just be beyond the ability of the central banks to control. To continue the seafaring metaphor, suggest you rig for rough seas in the near future.
Here’s gold just piddling around like it’s waiting for some thing big to happen.
I’m not suggesting you go bottom fishing, but it is interesting to me that gold doesn’t like it below $1,300 very well — at least not since early August. And even during that primarily July down turn, it didn’t stay below $1,300 for more than four weeks. Somebody is buying below $1,300. Presumably because they don’t think is going to be hanging around at this level for very long before it heads north again.
Perhaps equal to my dislike of bottom fishing is my dislike of conspiracy theories. But in matters financial where you have some huge players with superb connections to those at high levels of government, it’s inevitable that there will be some conspiracy theories tossed around. And some might even be right.
As I’ve said before, gold does not trade like a normal market. Relatively enormous quantities are offered at particular times on the futures exchanges — apparently with the intent of driving the price down. Which if viewed strictly from the point of the seller is madness. Why not unload your position gradually to get the most for your gold rather than blasting away with the whole lot at once, almost guaranteeing that you’ll drive the prices down thereby getting less for your gold? That kind of behavior almost screams manipulation. I’ll leave it to you to decide if you want to pursue that activity any further.
Meanwhile, here’s the backdrop for this week’s trading:
An increase in prices of 1.2% per year would hardly be noticeable. Right? But we all experiences increases in prices well in excess of that number. So what’s going on? US government economic reports are wrong — deliberately so.
Without going into great detail, certain “adjustments” in methodology are made which are claimed to make the statistics more accurate. They don’t. If you roll back the method of calculating price inflation to the way that statistic was figured twenty or so years ago, you get very different numbers — ones that are more in line with what we’re experiencing.
So why would the government do that? Think about it. What would happen in labor negotiations of it were taken as fact that price inflation were really running 9% per year? What would Social Security recipients be demanding? What would happen to interest rates? No doubt you see where this line of reasoning is headed.
At the risk of sounding like an advertisement for ShadowStats.com, correcting government economic reports is just what they do. When the methodology is sound, you get these results:
- Real Retail Sales Fell 0.3% Month-to-Month in September
- Official Data Indicate Slowing/Stagnating Third-Quarter GDP
- CPI-Based Social Security COLA Would Have Been Same With Chained-CPI
- September Annual Inflation: 1.2% (CPI-U), 1.0% (CPI-W), 8.8% (ShadowStats)
I’m just a subscriber and receive no compensation if you choose to subscribe. I’m just suggesting that having economic reporting that reflects reality is refreshing.
That’s kind of an interesting question, isn’t it? And it begs a couple more…
If there isn’t a maximum amount a country can borrow, why have a debt ceiling in the first place? It would be a useless hindrance to a practice that has no danger.
Actually what triggered this question in my mind was a recent interview with the president of the Chicago Federal Reserve, Charles Evans. He was asked if there is a practical limit to the size to which the Federal Reserve Bank’s balance sheet can grow — sort of a way of asking how much money the FED can print. Mr. Evans did a fine job of dancing around the question. He really didn’t answer it directly but indicated that the FED will have to do what it must to fulfill its mandates. Sounds like “open the flood gates” of money printing to me.
So, back to the question — is there a limit to how much money a nation can borrow? If there is, what’s the limit? 100% of the country’s GDP? Does it matter if the debt is bought by other nations or alternatively is bought by the FED which is another way of saying printing money to make payment on federal government expenditures?
A whole lot of questions, huh? Not a lot of answers? Well, we can look at what happened in other nations, and when we do things don’t look pretty for the USA from that perspective. Given the abysmal failure of the US government to control spending, I’ve got a feeling we’re going to get an answer to this question sooner than later.
The US dollar’s status as the world’s reserve currency is weakening. If you were a foreign nation, would you like to chow down on another sizable chunk of US debt, or would you prefer something like gold or silver? The first can and is being created out of nothing in quantities unprecedented. The other takes some work to dig out of the ground and refine and has held value for thousands of years. Sort of a no-brainer?
The idea that other nations are going to announce their intentions to disgorge themselves of their US dollar holdings is silly. It would cause the dollar to crater — just the opposite effect they want before they get rid of much of their holdings. So various sorts of subrosa methods will be employed.
Plan to wake up one day to the sound of the US dollar cratering. And it won’t be pleasant. If you’ve read this site for any length of time, you know what to do now.
While we’re waiting for the inevitable melt-down in the US economy, we may as well be doing something productive. Sitting around parked in front of the TV every night is probably not the best use of your time.
Okay, first, it’s obvious from that first line that I believe that some form of financial catastrophe awaits the US economy. I certainly do. And so do a whole lot of better observers than I. And so do, I would suspect, a lot of shills for the government in the media whose main job is to see that the social order is not disturbed — so they lie. Or maybe they really are that inept or ill-informed?
Of course, the effort to hide the financial collapse will eventually fail — and their tiresome “kicking the can down the road” talk will morph into “nobody saw this coming” or some other inane meme like blaming the crisis on China or who knows what. I have lost all patience with much of the media.
But back to doing something productive. There’s nothing wrong with investigating starting a small-business from home. Yes, I know, there are umpteen zillion books on doing that, and a lot of them are scams. So a different approach is needed. Try this:
- What do you enjoy doing in your spare time? Make a list.
- Can you convert any of those into a business with flexible hours? For example, if you love books, could you create an online used book store on Amazon? There are tons of books for sale at garage sales for next to nothing, so getting product cheaply is pretty simple.
- Are there genuine consumer-driven needs for any of those products or services?
- Can you reach that target market? With minimal expenditure of resources?
- Is it a low-overhead business?
- Can it be operated from most any location?
- How immune is it to an economic downturn?
- Can you involve other family members such as your kids in this?
Okay, get busy. And I’ll be back to chatting about the financial markets in the next day or two.
After all the excitement of the past few weeks with government shutdowns and lurid descriptions of what would happen if the debt ceiling wasn’t raised, the current economic scene seems downright placid. The US government can now borrow money in amounts unlimited so all’s right with the world. Well maybe not. There’s something about giving any government unlimited borrowing authority that should make even the most casual observer nervous.
So perhaps we do still have a few things to concern ourselves with besides an amusingly dysfunctional computer system for the new health care program. Nothing a few computer geeks can’t patch up. Just like a few economic geeks can pull the right levers and make our economy zoom again, right?
Well, it looks like John Williams at ShadowStats.com is not ready join the “happy days are here again” crowd. From his latest release:
- Weakening Trends Seen in Payrolls and Home Sales
- October Payroll Loss of Roughly 400,000 Remains Likely
- September Unemployment: 7.2% (U.3), 13.6% (U.6), 23.3% (ShadowStats)
- Rising Costs Boosted Construction Spending
And just when I was ready for a celebration…