back at cha. here's a partial cure:
Some highlights from the privateer, particularly hitting on his basis in case you are trusting your politicians and thinking of jumping into the stock market again.
- "At present, the assorted US "stimulus" packages are moving through the US financial system and they will crest between mid June and late July. After that, they will start ebbing away. Here lies the problem. With that ebb, the artificial foundation under the US economy ends and economic reality returns."
- "The US federal budget is $US 3.55 TRILLION with a built in budget deficit of $US 1.75 TRILLION. This is a budget in which 49.3 percent of proposed spending is being borrowed!...If federal taxes were to be raised by that $US 1.75 TRILLION to balance the US budget, the added tax burden would bury the US economy. Whatever the Obama administration does, the US is looking at a deep recession/depression. It is being deferred but cannot be avoided. Meanwhile, the costs climb."
- "Federal government loans, spending or guarantees to rescue the financial system now total more than $US 12.8 TRILLION since the international credit crisis began in August 2007, according to data compiled by Bloomberg as of March 31. That includes the $US 2 TRILLION on the Fed's balance sheet. This amounts to lending, spending or guaranteeing 89.5 percent of current nominal US GDP! That, on the face of it, should make it obvious that the US has entered into the land of the economically absurd. Lending by the largest US banks fell 6 percent in February compared to January, continuing a downward trend that began in October, according to data published by the Treasury Department."
- "Over the first half of the US fiscal year, personal income tax payments fell to $US 429.7 Billion from $US 503.5 Billion (14.7 percent) year on year, according to latest Treasury budget statistics. The Federal government is also losing revenue from corporate tax receipts which fell 57 percent from the first six months of fiscal 2008. Neither US consumers nor businesses can help the deficits."
- "The valuation of what had been used as the collateral underpinning the credit money system had fallen below the amount of credit that had been issued as loans. These loans are now hanging in mid air, making most of the US credit money system insolvent. This is what has caused the panic in Washington. The Fed has pounded [i.e., "printed"] $US 2 TRILLION into the US financial system and will not reveal who it sent the money to. The US Treasury has exploded into no limit deficit spending."
- "The real US economy is diving right out from under the US banking and financial system. If past economic history is any guide, and it is, this guarantees that after another attempt or two at "stimulus", the facts will finally have to be faced. Historically, when the facts were finally faced, the nation in question issued a new currency not encumbered by being credit based but based on a known and acceptable commodity. Then the "old" currency was either made of no legal or economic effect or those that remained were made freely tradeable in the market with a deadline set for such trading. After that deadline, they became worthless."
- "Today, the entire global monetary system is run by monetary cranks and has been since August 1971. Now, it has broken down..... Today we are "here", in the middle of this developing global situation. As individuals, our problem is to get safely from "here" to "there" - the time ahead - as safely as possible. Real safety will again be possible when our own nations return to a commodity based real currency and to a sound money system.
- The Privateer has consistently advocated that people hold 15-25 percent of their monetary wealth in the form of Gold coinage. Doing that means, in effect, that you already stand with the future means of payment in hand before that future arrives. All other private wealth should be held free and clear which means that there are no liens or loans pressing against them. Lastly, it is very good idea to hold enough paper cash to cover 60 to 90 days of normal expenditures."
- "The US Treasury, in turn, is on the road to borrow that money. It cannot tax for it since the real US economy has contracted too fast and too far for that. Back in February, Congress increased the limit for the US national debt to $US 12.1 TRILLION as part of the legislation that enacted President Obama's $US 787 Billion economic stimulus package. Now, the Democrats in Congress have advanced a $US 3.44 TRILLION US federal budget for next year with a built in $US 1.75 TRILLION budget deficit. But this is politics, not economics."
- "US GDP contracted at an annualised rate of 6.1 percent during the first quarter, little improvement on the 6.3 percent fall in the last three months of 2008. US exports fell by 30 percent, the US Commerce Department reported. New US business investment, normally made when companies are planning production increases, tumbled by a record 37.9 percent in the first quarter. US capacity utilisation is at a rock bottom 69.3 percent. In real economic terms, this amounts to almost one-third of all plants standing idle. The number of US jobs has fallen by 3.9 percent, exceeding the 3.2 percent decline in the 1981-82 recession. The 15.4 percent fall in US industrial production is worse than in previous recessions."
- "Presaging more woe in the US financial system, the collateral foundation underpinning $US 14.1 TRILLION in US mortgages has fallen further in the first quarter. Phoenix has achieved the "distinction" of becoming the first major US city where home prices have fallen by half since the market peaked."
- "US poverty as a mass phenomenon is back. More than 32 million Americans receive food stamps and 13 million are unemployed. This is poverty at the third world level, the level where people starve from need."
- "Next to unnoticed in the Obama budget which just cleared the House were calls for a $US 21 Billion increase to $US 534 Billion in US "defence" spending for 2010. That is $US 6.7 Billion more than the Bush administration had projected. The fact that the Obama administration is INCREASING US military spending is simply being ignored."
- ""Can US interest rates fall below zero?". The straight answer is no, they can't. But the articles point out that the Fed may be planning to push longer-term rates down to a level which could only be reached if shorter-term rates WERE "below zero". According to a "leaked" Fed memo, given the present levels of US unemployment and output, the ideal target rate would be MINUS 5 percent."
- "The latest estimate of US federal government spending for the fiscal year which ends on September 30, 2009 is $US 3,750 Billion. At that rate, the US government is now spending in about 10 hours what FDR's first administration spent in a year. Take a look at the increase in population since 1933. In 1933, the US government spent $US 4.6 Billion on 125 million people, that's a per capita amount of $36.80. In 2009, the US government will spend $US 3,750 Billion on 304 million people, that's a per capita amount of $12,335.50. Is this increase really necessary?" |
