Extend and pretend… That’s the government’s way of handling the crisis. Extend credit and cash to those who don’t deserve it. Then, pretend that everything is okay… But the problems don’t go away. They just get stretched into the future… What did the feds do for GM? They took over the company. They extended cash [...]
Why don’t people borrow? Because it’s not a liquidity problem. It’s a debt problem. A solvency problem. And it won’t go away by making more cash and credit available. Instead, all those bad decisions, bad loans, and bad investments have to be cleaned up. And that takes time. And while the economy is de-leveraging, people [...]
No discussion of the upcoming collapse of the bond market would be complete without a mention of Social Security. At least, after they’ve lost their money in stocks, real estate and bonds, Americans will at least have Social Security to live on, right? Wrong! You know all that money you pay in Social Security taxes? [...]
“How did it all come to this?” It’s a question we’ve asked ourselves many times along this Coast-to-Coast Correction Tour. The answers are everywhere…in Wickenberg, Arizona…Livingston, Texas…Lake Charles, Louisiana and here along the border of Mississippi and Alabama… More on all that in a second. But first, the “noise.” The Dow Jones Industrial Average managed [...]
Want to know what is really going on? Investors are waking up. They are wiping the sleep from their eyes. Behold! No recovery. Analysts and the commentariat are struggling to make sense of it. With record low mortgage rates, and after eight programs designed to boost up housing, for example, sales are still plummeting. July [...]
The FOMC announcement though it did tend to indicate that the Feds would indeed monetize the debt further seemed to be less of an issue by day’s end as it was at the beginning, as the market rallied back. Though again few reversals showed in stocks, one can see that foreign ETFs, drug and healthcare [...]
Indeed, even with the government’s report declaring the cleanup 75% complete, the Gulf of Mexico recovery will be slow and laborious. And expensive… As of a few hours ago, there’s enough fresh cement in the Macondo oil well to hold down the “mud” that’s keeping the oil beneath the seafloor. It’s not the final step [...]
Want to know how to make money in this economy? You do it by selling things to markets that are growing. Exporting, in other words. China’s growing. India’s growing. Brazil is growing. Dozens of other countries are growing. Sales in the US aren’t likely to go up. But sales to China? Sales to Brazil? That’s [...]
Remember our discussion of prices yesterday? Here at The Daily Reckoning, we have nothing against higher prices…and nothing against lower prices. It’s dishonest, misleading, and treacherously false prices that we don’t like. They send the wrong information. They may tell us that an item is plentiful, for example, when it is actually in short supply. [...]
Despite headlines screaming “the worst oil spill in history,” it turns out the BP blowout disaster wasn’t really as big a deal as you’d have thought. Oh, well…sorry. According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a [...]
What does an economist think…when he adjourns to the local bar…or is hauled away to the asylum? In the dead of night or the quiet of a confessional, does he laugh sourly at having fooled most of the people most of the time? Or does he curse his trade and feel like hanging himself? The [...]
There are two major schools of thought on what is coming next…and two renegade, home-schools too. There are those who believe we have a recovery…though weak…that will continue and eventually bring the economy back to health. This is the line of the Obama Administration and most mainstream economists. Then, there are those who think the [...]
On Friday, everything went down. Well, almost everything. The Dow fell 261 points. Gold dropped $22. Copper. Oil. The dollar. You name it; it went down. Unless you name US Treasury bonds – which were up! What does this mean? Maybe nothing. But since it accords with the direction we think the markets ought to [...]
Loewenstein and Ubel take aim at the jungle. They believe “behavioral economics,” in which you actually watch what people do, is a threat to their trade. “For all its insights, behavioral economics alone is not a viable alternative to the kinds of far-reaching policies we need to tackle our challenges,” they write. What sort of [...]
If we were speculators, we might consider selling. But here at The Daily Reckoning, we’re not gamblers. We hold gold because it represents real wealth, not because we think it will go up in price. We don’t really know what direction it is going. But that’s why we hold it. We don’t know what direction [...]
It is a national holiday in France, today. But your Daily Reckoning team is on the job anyway. We neither sleep nor rest nor take time to honor any of the world’s bogus holidays. We just reckon. Bogus holidays? Well, the storming of the Bastille was hardly cause for celebration. But we’ll come back to [...]
“As recently as two years ago, anyone predicting the current state of affairs (not only is unemployment disastrously high, but most forecasts say that it will stay very high for years) would have been dismissed as a crazy alarmist.” That was Paul Krugman in today’s newspaper. Thomas Friedman is fixing problems in the Middle East, [...]
Warning: serious thinking here… Big rally yesterday. The Dow was up 274 points. Gold went up very slightly and still closed below $1,200. What gives? A big change in direction? It’s probably nothing. Markets don’t go up or down all in one straight move. They play with investors like a cat with a mouse. They [...]
In the sushi again…just like we said! The US stock market managed a weak rally yesterday. The Dow rose 56 points. Gold fell, closing the day below $1,200. This morning, stocks are generally going down again all over the world. Why does everything seem to be going down? Because it’s a Great Correction, what else? [...]
Americans may have fretted a bit over the holiday weekend. The news has been bad. At least, if you regard a correction as bad. California is cutting its payroll and putting others on minimum wage salaries. Illinois has run out of money and stopped paying its bills. The stock market is going down. Bond yields [...]
