Economic Collapse

- “You should be in wealth-protection mode, not in trading mode”
John Williams

Very good audio interview with John Williams of Shadowstats.com released today. Listen carefully:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/2/6_John_Williams.html

“We are all Keynesians now” quothed first Friedman, then Nixon going off the gold standard in 1971, and now the followers of Bush’s and Obama’s quantative easing money printing schemes. All quothed in despair, because only a fool cannot see that unlimited use of the money print will lead to hyperinflation. So, here we are in 2010, stimuli a la Keynes or sound economics with the Astrian School? Well, time will tell if we wise up. Enjoy this funny, yet thoughtful, rap video.

“If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog
Real savings come first if you want to invest
The market coordinates time with interest

“Your focus on spending is pushing on thread
In the long run, my friend, it’s your theory that’s dead
So sorry there, buddy, if that sounds like invective
Prepared to get schooled in my Austrian perspective”

Here is a good summery of the financial collapse. This TED-talk is held in Tallinn, Estonia, by Alar Tamming. He is the Chairman of the Supervisory Board at Tavid/Tavex, a gold bullion dealer operating in Estonia, Latvia, Finland and Sweden. He is also an Estonian and he should know a thing or two about what happens when fractional reserve banking runs amok. The crisis in Estonia, caused by wreck-less lending by Swedish banks, is far worse than in many other countries in Europe. Personally, as my readers know, I keep as little of my money as I can in fiat paper and on deposit at the bank, and as much as I can in real money - gold. As a customer at Tavid/Tavex I can recommend them for all your gold bullion needs.

TEDxTallinn: Alar Tamming / English subtitles from Tedsterid on Vimeo.

Disclosure: I receive no income of any kind recommending Tavid/Tavex.

As many of you know Peter Schiff is now running for Senator in the State of Connecticut. Schiff is an American economist of the Austrian School, author, commentator and popular video blogger who regularly appears in the role of a bearish pundit on numerous financial news networks. He predicted the Dotcom crash of 2000 and the Housing crisis of 2007/2008 and like the author of this blog he belives that the US Dollar is heading for hyperinflation. He is a licensed stock broker, the president of Euro Pacific Capital with a 100 employees who successfully protect their clients wealth by moving out of the US dollar and into real money such as gold etc.

If you want a crash course in the problems with the US economy, watch this. A good hour well spent with a lot of information and humor. Enjoy.

Disclosure: I have no vested interest in Euro Pacific Capital nor do I receive any payment for writing this.

Here’s a great commentary by Peter Schiff on the low-lights of Obama’s State of the Union address held on the 27th January 2010.

Cutting the federal deficit is the only way back to a sound economic recovery and job creation. You can’t keep spending money you do not have forever. The fact is that the US is broke. Until the federal deficit is turned back to a surplus the Fed will keep printing money through “quantitative easing” which should more appropriately be called “massive worsening” leading to hyperinflation and the death of the US Dollar. Obama plans to “cut spending” with a total of 250 billion US Dollars over 10 years. Yes, 10 years. Thats 25 billion each year at the same time the official expected federal deficit is 1.35 trillion. Thats 1 350 billion. Obama just announced “savings” of less than 2%. I guess its a start…

Agora Financial, LLC & The Daily Reckoning interview with Marc Faber:
http://bitcast-a.v1.iad1.bitgravity.com/agorafinancial/DR/faber/indexAF.html

Here is a great article by Bill Bonner on the state of debt of governments sent out today to Daily Reckoning subscribers.
Read the rest of this entry »

Jim Sinclair has an excellent analysis quoted below. Read the article “Dubai default threat rattles world stocks” as well as Sinclairs comments below.

Dear Friends,

Overnight news out of Dubai has sent global equity markets reeling and generated a safe haven flow into the US Dollar as carry trades are unwound and a flight away from risk occurs. Dubai has asked for a 6 month moratorium on its debt obligations, which for all practical purposes is a type of default. Needless to say, this came with little to no warning and has sent the markets into quite a tizzy.

Gold shot higher on the news and touched a record $1,195 before some light long liquidation connected with carry trade unwinding got underway. Look for it to be well bid on any setbacks in price as this sort of news is extremely disturbing. After all, we are talking about the financial hub of the Middle East. Imagine the repercussions that would occur should London have announced this sort of news and you can understand why stock markets were pummeled overnight.

Stocks have been floating higher and higher for the reasons described yesterday (increased profits due to expense cutting plus easy money and lots of liquidity) but this is the kind of news that could cut off all such rallies right at the knees. The reason – it creates fear and uncertainty, two of the prime ingredients in a selling binge. If Dubai could go under, then who or what might be next becomes the nagging question hanging over the markets like the proverbial sword of Damocles.

We are in a period in which we could experience price swings across the markets of the magnitude which will parallel those that we witnessed as the Japanese Yen Carry trade was unwound last year. Huge leveraged bets employing the Dollar as the borrowed currency have set up a situation in which billions of Dollars in one way bets are once again on the table. These idiots never learn as their greed will be the ruin of them all but unfortunately, it is always the innocent and those who play by the rules who get caught in the crossfire generated by the pond scum hedge fund community.

Be careful out there and be thankful that you own gold. Things are coming unraveled at an alarming speed. Just imagine the kind of losses that are now on the books of those banks who hold Dubai sovereign debt. Then again, that should not be a problem. The Central Banks can just print them some more money to replace those losses. Heaven help us all…