Gold-Buying Central Bankers May Extend Record Rally

By Pham-Duy Nguyen

Central banks that were net sellers of gold a decade ago are buying the precious metal to reduce their reliance on the dollar as a reserve currency, signaling demand that may extend a record rally in prices.
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Comment: At least a few thoughts should be spend to the problem in how far this change of mind by central banks is actually a contrarian signal. The decisive month will be June this year when QE is to run out. Full concentration is warranted in the months of May in order to be ready when hell will break loose from June onwards. For the rest of April we still are left with some muse time for brainstorming and imagining. After May it will be only action. Turmoil will be so rough that hardly any time for thinking could be left. Be ready in time.

Fight of the century

Hayek vs. Keynes
Round Two
Sequel to Fear the Boom and Bust
Reminder
Round One

The Chairman has spoken

Federal Reserve Chairman Ben S. Bernanke signaled the Fed will maintain its record monetary stimulus after ending large-scale bond purchases in June, while the need to contain inflation means further easing is unlikely.
“It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk,” Bernanke said at his first press conference following a meeting of the Federal Open Market Committee. “Ultimately, if -- if inflation persists or if inflation expectations begin to move, then there’s no substitute for action,” Bernanke said. “We would have to respond.”
Stocks extended gains, the dollar weakened and Treasuries fell after Bernanke reinforced the view of the FOMC, which released its policy statement today, that borrowing costs are likely to stay low for “an extended period.” The panel agreed to finish $600 billion of Treasury purchases in June and said surging commodity prices will probably have a transitory effect on inflation.
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Comment: The monetary policy of the Fed has become the equivalent to that of the typical "hit and hope"-golfer.

The fox gets out of its foxhole

Bernanke to meet the press, watchful of his words

Bernanke to meet the press at historic news conference, watchful of his words

Paul Wiseman and Jeannine Aversa, AP Economics Writers, On Tuesday April 26, 2011, 7:52 pm EDT

WASHINGTON (AP) -- When Ben Bernanke makes history Wednesday as the first Federal Reserve chief to begin a series of regular news conferences, his tasks will be simple. That doesn't mean they'll be easy:
Make no unintended news. Defuse critics of Fed policymaking. Say nothing that might spook investors.
"If he succeeds, he will not make any impact whatsoever" on bonds, stocks or the dollar, says Timothy Duy, an economist at the University of Oregon who writes a blog on the Fed.
The historic news conference, the first of three this year, is part of a long-standing Bernanke campaign to make the central bank more transparent and publicly accessible. His efforts have included town-hall meetings and appearances on "60 Minutes." The chairman's public appearances have followed criticism that the Fed, an independent government agency, was for too long secretive and unaccountable.
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Comment: Poor Bernanke, so much trouble for such low a salary. It is worse than ridiculous, nothing but lies and camouflage. What a sad spectacle. Only for morons to participate. Beware of the ships that are destined to sink.

Ron Paul will run

U.S. Representative Ron Paul ofTexas plans to announce today in Iowa that he is forming an exploratory committee for a third presidential campaign.
Paul, a 2008 Republican presidential candidate whose anti-tax, anti-government politics struck a chord with a swath of voters and fueled fundraising, will make a decision on whether to run by the middle of next month, said Jesse Benton, Paul’s political director.
“There’s a lot of enthusiasm,” Benton said. Paul plans to attend a Republican primary debate May 5 in South Carolina.
Before his 2008 bid, Paul ran for president in 1988 on the Libertarian Party ticket. He is scheduled to announce his exploratory committee in Des Moines at 3:45 p.m. local time, Benton said.
Paul, who heads the House Financial Services subcommittee that oversees the Federal Reserve and wrote a 2009 book “End the Fed,” has long pushed for legislation to increase scrutiny of the central bank. He joined with his son Rand, who was elected as a Republican senator from Kentucky in November, to introduce legislation this year to require an audit of the Fed by the Government Accountability Office.
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Comment: Although Ron hardly can win, his candidacy for the presidency will give another boost to Austrian economics and thereby may help to pave the way for sound economic policies.

Leaving Las Vegas

Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.
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Comment: Often it is easier to decide what to leave than were to go.

Fed Officials Count on Untested Tool to Hold Off Inflation

By Caroline Salas

Federal Reserve officials are staking their inflation-fighting credibility on an untested tool: the power to pay interest on bank reserves.
Congress granted the Fed this ability in 2008, and ChairmanBen S. Bernanke, Vice Chairman Janet Yellen and New York Fed President William Dudley have all cited it as a main reason why they’ll be able to keep the U.S. economy from overheating after pumping record amounts of cash into the financial system. Raising the rate, currently at 0.25 percent, is intended to entice banks to keep their money on deposit at the Fed instead of loaning it out and stoking inflation.
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Comment: So far it has worked, yet it shows how absurd central banking has become. Even more so: any slight error on the side of the Fed will now have lethal consequences. And err they will.

Just as expected

Silver, Gold Reach Records as Dollar Falls

Silver and gold climbed to records and oil rose for a fourth day, while the dollar weakened, amid concern inflation will accelerate. U.S. stocks retreated before a report on new-home sales.
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Comment: We're getting closer to the point of annihalation. The authorities have lost control. That's the point when they are most dangerous. The government is desperate - not to speak of the Fed.

That's what American kids learnt about economics

In the 1970 and 1980s, the most widely used textbook taught millions of students nothing less than communism and vulgar Marxism clad in "mathematical economics". Today we're paying the price.

Gary North explains
"... Right up until the collapse of the USSR, Nobel Prize-winning economist Paul Samuelson wrote in his widely assigned textbook on economics that the USSR proved that central planning could achieve high output. Economist Thomas DiLorenzo has offered two choice quotations from Samuelson's textbook.

"Every economy has its contradictions …. What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." – 1985 edition. "Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." – 1989 edition.

Yet by 1989, it was clear to everyone that the USSR was bankrupt. Soviet Premier Gorbachev was coming to Western governments and bankers, begging for more aid.
Two years earlier, the unknown economist Judy Shelton had sounded the warning: the USSR was about to collapse economically. She got a polite hearing, but there was no bandwagon effect. Samuelson tried to head off this loss of faith among economists.
Admittedly, Samuelson may not have written these words. Maybe co-author William Nordhaus wrote them. By that stage, Samuelson had long since retired. The book's royalties had made him a multimillionaire. Intellectually speaking, he was by 1985 a very rich goldbrick. He appeared to be working, but he wasn't.
But his view on the USSR had not changed. One critic has reminded us of this.

In the 1973 edition of his famous textbook Economics he predicted that though the Soviet Union then had a per capita income roughly half that of the United States, it would catch up to the United States in per capita income by 1990, and almost certainly would by 2015 because of its superior economic system.

Paul Samuelson was the premier goldbrick in the economics profession in the second half of the twentieth century. He appeared to be working hard, but his output was substandard. He got very rich teaching millions of freshmen how to have careers as goldbricks: how to give the illusion of valuable work, but never producing anything that could be applied profitably to the economy. Keynesianism is goldbrick economics..."
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Comment: Samuelson killed not only economics, worse: by killing economics he killed a large part of our civilization. The hardest hit nation was America, next in line was Britain and Europe. Will these becons of light ever recover? When I go to a country I look around in the bookstores and when I see, as I did last year in Argentina, that Samuelson is still in the shelves, I know that there is not yet any hope for this country. My advice: invest in countries where you find Mises on the shelves. There is probably no better long-term indicator thant this one.

Path well set

Dollar Drops to Three-Week Low Versus Yen; Euro Jumps

By Ron Harui and Monami Yui

The dollar fell to a three-week low against the yen on speculation the Federal Reserve will reiterate next week its intention to keep interest rates near zero, damping the appeal of U.S. assets.
The euro surged to a 16-month high versus the dollar in the holiday-shortened trading week ...
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Comment:  Well in line with our scenario -
Check

A lot of debt and no money

Survey finds nearly one-third of respondents didn't have enough money to live onBy The Canadian Press
TORONTO - Nearly one-third of Canadians that responded to a recent survey backed by a major Canadian bank said they didn't have enough money to cover living expenses.
An online survey completed for TD Canada Trust (TSX:TD) also found that 54 per cent of the 1,003 people who answered said it was a real struggle or impossible to save.
The report, released Wednesday, says that 38 per cent of respondents said they had no savings and 30 per cent said they didn't have enough money for their living expenses.
On the flip side, 30 per cent of the respondents said they had enough money saved to cover living expenses for at least four months.
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Comment: The culture of debt that has been spreading across the globe over the past couple of decades has produced a false prosperity. Payback time has come.

Quote from April 2004 (at a time when Bernanke & Co. promised eternal prosperity)

"A fall in the dollar from its pedestal with no substitute to replace it would … support the theory that we may be entering a period of currency chaos and a global economic contraction," warned economist Antony Mueller. "In the final stages of the currency crisis, the dollar will most likely devalue not so much against the euro and the yen, but, instead, most of the currencies combined will devalue drastically against gold."
Source
The Demise of the Dollar? (2002)
The End of Dollar Supremacy (2003)
Mr. Bailout (2004)

German hyperinflation

When Money Dies - back in printThe Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany
This history of inflation in Weimar Germany is probably the most readable and riveting ever published. This is the reason this book, published first in 1975, is so legendary. The first generation that read it went wild and bought as many copies as were available. Then, mysteriously, it went out of print.
For years, copies fetched thousands of dollars on the used-book market. People were willing to pay. For those who couldn't afford it, there’s nothing like that kind of price tag to draw interest.
Somehow a publisher has finally managed to sort out a complex rights issue to bring it back into print.
The Mises Institute is interested because the author has a thoroughly Austrian take on the money issue here. And as a narrative of the wild events of the period, nothing else compares.
This was a time of bizarre parallels: amazing riches coinciding with terrible poverty, mass quantities of money coinciding with a shortage of money, mania and hysteria coinciding with mass depression, frenzied freedom coinciding with the rise of dictatorship. There is no better historical incident to illustrate what inflation does to society: it turns everything upside down. And the circumstances surrounding how it all occurred are eerily similar to our own today.
In short, you will find this book terrifying, gripping, educational, and extremely powerful.
Comment: Learn about the past in order to prepare for the future.

Inflation warning from McDonald's

McDonald's warns of higher food inflation 

By Lisa Baertlein and Phil Wahba

LOS ANGELES/NEW YORK (Reuters) - McDonald's Corp (NYSE:MCD - News) forecast higher prices for beef, dairy and other items and said it would cautiously raise prices to keep attracting diners, who are grappling with higher grocery and gas bills.

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The verdict

S&P Tells Biggest Debtor Don’t Blow Final Act: Caroline Baum

"Rarely has a credit rating company made such an astute observation of the human condition.
“We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” Standard & Poor’ssaid on assigning a negative outlook to the U.S. AAA-credit rating Monday.
Any observer of the budget debate in Washington would have to believe there’s a material risk, too.
The U.S. Treasury, aware that any rise in interest ratesfrom increased credit risk would further damage its fiscal position, was quick to counter S&P’s shot across the bow. The negative outlook “underestimates the ability of America’s leaders to come together” to solve the debt problem, Assistant Secretary for Financial Markets Mary Miller said.
Come together? Miller must be watching a different theatrical production than I am. Treasury Secretary Tim Geithnerwas shuttled off to TV business channels yesterday to tell us that, unlike S&P, his outlook on the U.S. fiscal situation isn’t negative.
Take a look at the first four acts of this drama, and you decide who’s right..."
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Comment: Modern politics has its own logic which means that there is a permanent pressure for governments to spend and in particular to spend borrowed money. At least 90 per cent of our current problems in politics are of systemic nature.

Euro on the rise

EURO 1.4555

Geithner Downgrades His Credibility to Junk: Jonathan Weil

By Jonathan Weil - Apr 20, 2011

Fox Business reporter Peter Barnesbegan his televised interview with Treasury Secretary Tim Geithner two days ago with this question: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
Geithner’s response: “No risk of that.”
“No risk?” Barnes asked.
“No risk,” Geithner said.
It’s enough to make you wonder: How could Geithner know this to be true? The short answer is he couldn’t.
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Comment: My question is how you can downgrade to junk if you're junk to begin with.

Going down the drain

The USA Watchdog observes:
"... In a recent report, economist John Williams of Shadowstats.com contends a declining U.S. currency is reflected in spiking gas prices.  Williams’ said, “. . . the primary problem behind higher oil and gasoline prices is the Fed’s efforts at dollar debasement, but few in the media are willing to blame the Fed . . . Also hitting the dollar, though, are increasing instabilities in and ineffectiveness of political Washington, D.C., as viewed by the rest of the world.”

Williams says gold and silver are nowhere near their former inflation adjusted highs of 1980.  Back then, gold hit $850 per ounce and silver $49.45 per ounce.  To truly equal that price in today’s inflated money, gold would have to be “$8,331 per troy ounce” and silver would have to be priced at “$485 per troy ounce,” according to Williams’ recent calculations.

Rising precious metal prices are signaling impending doom for the U.S. dollar.  Please keep in mind, $7 trillion is held outside the country by foreigners.  A sudden sell-off could spell ruin in the form of high inflation (if not hyper-inflation) for most Americans.  All the warning signs are flashing a coming currency crisis—the only question is when?  I’m betting the crisis starts by the end of this year – 2011.
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Comment: I cannot imagine how to get out of the trap. What I can imagine, however, is a crash anytime soon, first of the bond market, then of the dollar, and then of the stock market. Global turbulence, massive reshifting of financial resources, currency crashes around the globe, a frenzy search for safe havens, social unrest, political upheavel, blood on the streets, hunger, starvation, and despair --- and all of this being brought about by one single source: the ruthless explosion of paper money fabricated by modern central banks.

A recipe for disaster

Comment: Another economic catastrophe is in the making. There can hardly be any doubt that after the current boom we shall get a terrible bust. This time it's different? Yes, in a certain way it is always different. This time it is different because more and more people know by know who the ral culprit is: centralbanks and the fiat monetary system.

Will there be a revolt? Probably yes!

State shortfall to widen

"... Fiscal 2012 “will actually be the most difficult budget year for states ever,” said Nicholas Johnson, director of the state fiscal project at the Center on Budget and Policy Priorities, in an interview with The Washington Post.
The center reported last month that states will see budget shortfalls totaling more than $140 billion next year as they continue to wrestle with depressed revenue levels while federal stimulus dollars and reserves run out.
Read more: http://www.politico.com/news/stories/0111/47165.html#ixzz1JveeRT7F
Comment: Financial market awareness of the trouble to come is way behind the curve.

The bubble of higher education

Students: You Are Exploited Debt-Serfs

By Charles Hugh Smith 04/12/2011

Students and parents, wake up: your only salvation lies in political engagement and action.
Of all the exploitative systems in the U.S., none is more rapacious than the Education Cartel. Like the proverbial frog that is unaware that it's being boiled because the water temperature rises so gradually, college students and their parents are unable to recall what higher education was like before students were herded into debt-serfdom.
Apologists for the Education Cartel like to blame Corporate America or the banks, but the reality is that the Federal and State governments and the employees of the Cartel are willing partners in the exploitation and fraud. How did we get to the boiling-water point where students are expected to take on $100,000 or more in debt to attend college--even a mediocre one?
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Comment: We live in an age of secular myths. Former generation may wonder more about the mythical beliefs of our age than we do about the Middle Ages. At the top of the myths of our time rank education, medicine and democracy.

Make your reservations for this book

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown [Hardcover]

Detlev S. Schlichter

In an engaging style based on extensive research, Paper Money Collapse shows conclusively why paper money systems - monetary systems that are based on an elastic and constantly expanding supply of money (such as our system today) as opposed to a system of commodity money of essentially fixed supply - are inherently unstable and why they must lead to economic disintegration. All paper money systems in history ended in failure. The book shows why this must be the case and why it will also be the fate of the present system. The conclusions are controversial as they go against the present consensus, which holds that elastic state money is superior to inflexible commodity money (such as a gold standard), and that expanding money is harmless or even beneficial for as long as inflation stays low. The book shows that the present crisis is the unavoidable result of continuously expanding fiat money, that the current policy of accelerated money production to ‘stimulate’ the economy is counterproductive and that, if pursued further, it will lead to a complete collapse of the monetary system.
Paper money systems are confidence games. When the public realizes that the printing press is increasingly used to keep states and banks solvent, this confidence will evaporate quickly. The endgame will then be sovereign default, hyperinflation and economic chaos.
More information
About the author:
D. Schlichter  has worked for 19 years in financial markets as a derivatives trader and, for the most
part, as a portfolio manager. He resigned form my job at Western in 2009 to focus
exclusively on writing this book.
Read more here
and here

Our daily bread give us today - and tomorrow (maybe)

World's Poor ‘One Shock’ From Crisis as Food Prices Climb, Zoellick Says

By Eric Martin - Apr 16, 2011
World Bank President Robert Zoellick said the global economy is “one shock away” from a crisis in food supplies and prices.
Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.
Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. “We are one shock away from a full-blown crisis.”
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Comment: Global hyperinflation will breed havoc around the globe. Things go on as if planned - by whom? An easy way to eradicate half of the world's population. Who needs a nuclear bomb when we have ethanol?

China reduces US exposure

China trims holdings of US securities in February

China trims holdings of US securities for fourth straight month; Japan boosts its holdings

Martin Crutsinger, AP Economics Writer, On Friday April 15, 2011, 10:07 am EDT

WASHINGTON (AP) -- China, the biggest buyer of U.S. Treasury securities, trimmed its holdings for a fourth straight month in February and Japan boosted its holdings one month before a devastating earthquake hit the country.
China cut its holdings by $600 million to $1.15 trillion, the Treasury Department reported Friday. Japan, the second-largest foreign holder, boosted its holdings by $4.4 billion to $890.3 billion. There have been concerns that the March earthquake and tsunami may cause Japan to scale back its purchases in order to use the money for reconstruction.
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Comment: It's easy to solve the equation: China does not want it anymore, Japan can't anymore. Conclusion: a global sell-off of US assets. Better don't wait until it is too late.

Google and bonds

Both are extremely overpriced.
Google
Bonds
Last call!

Euro moves ahead

Euro Advances Toward 15-Month High on View Debt Crisis Will Be Contained
By Liz Capo McCormick and Allison Bennett - Apr 14, 2011 2:20 PM GMT-0300
Business ExchangeBuzz up!DiggPrint Email .The euro advanced toward a 15-month high against the dollar on bets the sovereign-debt crisis in nations including Portugal and Greece will be contained and the European Central Bank will raise interest rates further.
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Comment: After way too much doom and gloom for the euro, the risk now is too much optimism.

China got (at least) $ 3 trillion in foreign exchange reserves

World-Record China Reserves Pass $3 Trillion in Policy Challenge for G-20

By Bloomberg News - Apr 14, 2011 6:02 AM GMT-0300

China’s foreign-exchange reserves exceeded $3 trillion for the first time and bank lending accelerated, signaling an escalation in the global economic imbalances that Group of 20 finance chiefs are trying to rein in.
China’s currency holdings, the world’s biggest, swelled by $197 billion in the first quarter, the nation’s central bank said on its website. A separate report showed new loans were a more-than-estimated 679.4 billion yuan ($104 billion) in March.
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Comment: What to do with that heap of money? Well, spend it. What for? Buy food supply and natural resources. Consequence: do as the Chinese do. Buy and don't look back because prices are risen and they will go up dramatically more so in the future.

When the buck does stop

by Charles Hugh Smith	The Devolution of the Consumer Economy (April 6, 2011) The U.S. transformed into consumer economy that is exquisitely sensitive to debt and the costs of servicing credit. In other words: the bill is finally due, Baby.

Everyone who is currently confident in high-inflation-hyperinflation is recommending buying tangible assets. Perhaps that should be narrowed somewhat to tangible assets with a positive return on investment. It seems very likely that the U.S. will be awash in surplus boats, yachts, cars, trucks, houses, exercise machines, etc., as the "owners" (if you bought on credit, and it's now worth less than you owe, then what do you own?) will no longer be able to pay the slip fees, registration fees, insurance premiums, mortgages, property taxes, storage unit fees, etc.
No, conventional economics, demand is not insatiable or permanent, and neither is credit expansion.
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Comment: We may well see a glut of things that we do not need which are being offered without finding buyers along with extreme scarcety and high prices for the things we need.

An odd scenario

It is time to consider an odd scenario: global asset evaporation. Such an event would mean that nothing is save anymore. Imagine that almost anything goes up in smoke: bonds, stocks, and even precious metals and natural resources. The rich suddenly get as poor as the poor because it is all gone. Nobody wants to buy anything anymore. Just imagine. Can you?
You still have your factory, you still have your car, you still have your diamonds, you still have your gold and your paintings. It is all still there, but nobody wants to buy anything of that anymore. The trading is at an halt. What your stocks are worth nobody knows because there is no no-one around who would wish to buy them. A different kind of Atlast shrugged. No bids anymore. Just death. The death of money. The end of wealth as we knew it.

Euro at 1.45

The euro yesterday rose above $1.45 for the first time since January 2010 as officials of the International Monetary Fund, the European Commission and the European Central Bank were due in Lisbon to start preparing an estimated 80 billion euros ($116 billion) in aid for Portugal. The European Union aims to reach an agreement on the package on May 16, about three weeks before Portugal’s June 5 elections.
“Now that Portugal is in the hospital, so to say, that’s pushed back the sovereign concerns as an issue,” said Capurso.
ECB President Jean-Claude Trichet and colleagues raised the main refinancing rate last week to 1.25 percent from a record low 1 percent, where it had been since 2009, and left the door open for further rate increases.
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Comment: Does anyone remember how alone I was a couple of months ago when I said that the euro would rise rapidly down from its low of about 1.19 to over 1.40? There was an avalanche of anti-euros in the market, and Krugman and Roubini, as always, couldn't be happier to spill more fuel into the fire. I know, I know, finance is probably the only professional activity were being right doesn't pay in contrast to being wrong because being wrong usually means to follow the crowd and we all want to hear what we suppose that we know. If you want to make a career as a financial guru, better say what your listener wants to hear. Do not care whether it is right or wrong. This is a bitchy business. Yet in the end it is the suckers that pay. And rightly so. Bleed on, you crazy followers of Krugman, Roubini & Co., you don't deserve any better.

Government shutdown

The government faces a partial shutdown Friday at midnight if Congress doesn't take action to avoid one. Negotiations on legislation to keep federal agencies running is hung up over negotiations over a Republican demand for steep spending cuts.
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Comment: The baby cries for candies and when the stack is gone it will cry for more. The brat is spoiled and now it takes a very big stick to teach the rotten child a lesson. Instead of waging criminal wars abroad and silly wars at home the government should better wage a war on itself: the war against debt. Yet I may be too optimistic.

It's time for a pause

Stocks, U.S. Futures Rise on German Industrial Orders; Gold, Euro Advance

By Stephen Kirkland - Apr 6, 2011 10:03 AM GMT-0300

Stocks rose in Europe and U.S. futures advanced after German industrial orders climbed and banks announced plans to raise capital. The euro strengthened on bets the European Central Bank will increase interest ratestomorrow, while gold gained to a record for the second day.
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Comment: We've been pretty much right for a long time with our bullish assessment for the euro, gold and other precious metals. Now it is time to reconsider positions. The next big thing cold the the yen. One may consider the option to take some profits and move the proceeds into a long position for the yen.

The euro on the rise

The euro's ascent since it hit a multi-year low around $1.18 last summer has taken many currency traders by surprise, not least because Europe's debt crisis continues to brew, with Portugal widely-tipped to become the third euro country following Greece and Ireland to get an international bailout.
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Comment: We did not belong to these pessimists, on the conrary. At this blog you have heard for months and months that the euro will strengthen against the US dollar. Last summer, when the euro hit a temporary low it seemed as if the whole world, and currency traders in particular, were united in the opinion that the euro would go down furthermore. I felt pretty much alone at that time. Yet, in the markets, it pays to be alone. In fact one rarely can make a lot money other than when one is pretty much alone with one's conviction. I say conviction, not opinion.

An American patriot speaks out

Paul Craig Roberts is in pain:
"... The obscene wars of aggression, the obscene profits of the offshoring corporations, and the obscene bailouts of the rich financial gangsters have left the American public with annual budget deficits of approximately $1.5 trillion. These deficits are being covered by printing money. Sooner or later, the printing presses will cause the US dollar to collapse and domestic inflation to explode. Social Security benefits will be wiped out by inflation rising more rapidly than the cost-of-living adjustments. If America survives, no one will be left but the mega-rich. Unless there is a violent revolution.
Alternatively, if the Federal Reserve puts the brake on monetary expansion, interest rates will rise, sending the economy into a deeper depression..."
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Comment: Along with Ron Paul, Paul Craig Roberts is the most honest American patriot I can think of. Both of them are in despair, both of them haven't yet given up. Good so.

Geithner in panic mood

Treasury Secretary Timothy F. Geithner told lawmakers that a failure to raise the debt limit would bring “severe hardship” for Americans as the government is forced to suspend services such as Social Security payments.
Geithner, in a letter to members of Congress, said the U.S. will reach the $14.29 trillion limit on its ability to borrow no later than May 16 if Congress doesn’t act. Republican lawmakers, including Senator Marco Rubio of Florida, have been resisting a debt-limit increase while calling for extensive budget cuts.
“The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations,” Geithner said yesterday in a letter addressed to Senate Majority LeaderHarry Reid.
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Comment: What is the meaning of a limit if you don't respect it. Let's lift all limits like we do with the debt limits. Let's begin with lifting the speed limit and the limits for radiation.

Trichet's fake game plan

David Mchugh, AP Business Writer, On Tuesday April 5, 2011, 7:17 am EDT

FRANKFURT, Germany (AP) -- The spotlight will fall on the European Central Bank on Thursday as markets look to see how aggressively the bank follows up an expected interest rate increase as it seeks to snuff out rising inflation.
Bank President Jean-Claude Trichet has made it clear that a spike in inflation is not the legacy he wants to leave when his term ends Oct. 31, and he has clearly signaled his determination to start raising rates despite the economic ripples from the disasters in Japan and turmoil in the Arab world and Europe's own debt crisis.
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Comment: Trichet's game plan will backfire. His idea is to impress the market and save his face. He doesn't take into account that he can no loger save it. The era when central bankers had an almost unnatural aura is over. There is mistrust and fear in the markets, and a lot of despair.

Chine raises rates

BEIJING (AP) -- China raised key interest rates Tuesday for the fourth time since October as it tries to dampen high inflation.
The People's Bank of China, the country's central bank, said the quarter-percentage-point increase lifts the one-year lending rate to 6.31 percent and the rate for one-year bank deposits to 3.25 percent.
The series of rate hikes reflects concerns about overheating and excess liquidity in the Chinese economy that are driving up prices, especially of food.
China's consumer prices rose 4.9 percent in February, driven by an 11 percent jump in politically sensitive food costs that account for half or more of household spending among the millions of Chinese who have seen little benefit from three decades of economic reform.
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Comment: Still behind the curve

A life well lived

Joseph Keckeissen, RIP

Posted by Lew Rockwell on April 4, 2011 01:28 PM

How sad to learn of the death of Salesian Brother Joseph Keckeissen, 86, professor of economics at Francisco Marroquin University in Guatemala. Born in Brooklyn, Joe received his PhD in 1966 from NYU, where he was a member of the Mises Seminar. Joe influenced generations of students, and it was always a delight to have him visit the Mises Institute. He was a wonderful teacher, full of humor and dedication, but what I remember most was his humility and transparent goodness. Requiescat in pace.
Comment: I'm proud that I can say that Joe was a friend of mine. I'll miss him as a person, an economist, and as a thinker.

Toyoto plant shutdown in North America

LOUISVILLE, Ky. (AP) -- A Toyota Motor Corp. spokesman says it's inevitable that the company will have to shut down its North American factories due to shortages of parts from Japan.
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Comment: It seems that many analysts still don't get it what the Japanese catastrophe means for the world economy.

And the Fed says there's no price inflation

NEW YORK (AP) -- The price of oil jumped to a fresh 30-month high, above $108 a barrel Monday as fighting in Libya and unrest in the Middle East continued to raise doubts about future supplies...
Gasoline pump prices have followed oil higher and remain at record levels for this time of year. Gasoline added nearly 2 cents on Monday, reaching a national average of $3.662 per gallon, according to AAA, Wright Express and Oil Price Information Service...
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Comment: Crude alone will already do the job and bring overall price increases not to speak of specific shortages that may appear in the food sector. The Fed won't raise interest rates, you may bet. US monetary authorities have already signaled that they believe that price inflation will actually be a good thing. Only someone who is completely untouched by historical knowledge (as most Fed economists in fact are) can think such a stupid thing.

And the Fed says there's no inflation

Benchmark crude for May delivery gained 9 cents to $108.03 a barrel in midday trading on the New York Mercantile Exchange. Earlier in the session, the contract reached $108.78 per barrel, the highest price since September 2008. In London, Brent crude rose $1.35 to $119.76 a barrel on the ICE Futures exchange...
Gasoline pump prices have followed oil higher and remain at record levels for this time of year. Gasoline added nearly 2 cents on Monday, reaching a national average of $3.662 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 16.9 cents higher than a month ago and 83.6 cents more expensive than the same time last year.NEW YORK (AP) -- The price of oil jumped to a fresh 30-month high, above $108 a barrel Monday as fighting in Libya and unrest in the Middle East continued to raise doubts about future supplies.

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History the right way

Rethinking the Twentieth Century

Posted by Thomas Woods on April 4, 2011 01:12 AM

This weekend I carved out some time to read a good chunk of Ralph Raico’s excellent new book Great Wars and Great Leaders: A Libertarian Rebuttal, which brings together (often in expanded form) some of the author’s writings that have appeared in various outlets over the years.
When people ask me for living historians I admire, I always mention Ralph Raico, whom I first met at a seminar in 1992. His work reminds me why I am a historian: in a world of propaganda, I want to be a truth-teller. You will walk away from this book with the conviction that twentieth-century history is bound to be rewritten, and in a way that is not going to be flattering to the state.
One benefit of the Austrian renascence is that we now have more economists than the Austrian School has been able to boast in a long time. But as David Beito — who has some kind words for Raico’s book today — asked not long ago, where are our historians? I am convinced that it is books like this one, and the scholarly example of great mentors like Ralph Raico, that will inspire a new generation of libertarian historians determined to overturn the court history that flatters our rulers and glorifies the state.

Time to sell Google?

SAN FRANCISCO (AP) -- Google co-founder Larry Page is known for his vision, passion and intelligence.
Yet there is a fair amount of concern that Page's other known traits -- his aloofness, rebellious streak and affinity for pursuing wacky ideas -- might lead the company astray. Page takes over as CEO on Monday as fast-rising rivals and tougher regulators threaten Google's growth.
Investors used to Google Inc.'s consistency in exceeding financial targets worry that new leadership will bring more emphasis on long-term projects that take years to pay off. And many people still aren't sure he has enough management skills to steer the Internet's most powerful company.
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Comment: The economic landscape has fundamentally changed. There are much more early highflyers and many more crashes than before. Any investor should take heed of Schumpeter's concept of "creative destruction". As much as nowadays there is innovation, as much there is annihilation. Google's creative phase is over and that of its destruction has begun.

End game for Berkshire Hathaway

David Sokol has abruptly resigned from Berkshire Hathaway, the company run by the billionaire Warren E. Buffett, raising major questions about the future stewardship of the conglomerate.
Mr. Sokol, 54, was long considered to be a leading candidate to take over from Mr. Buffett, now 80. The question of succession has been a concern to Berkshire's investors and the many avid followers of Mr. Buffett, who has said he has no plans to step aside anytime soon. The company has given few clues about its plan other than to say it has identified four current Berkshire managers who could become the next chief executive. Now that game plan may have to be tweaked.
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Comment: No-one can match Buffett as an investor.

No use for this man anymore

"I do not want to be known as the 'Sign Board Guy,'" Joshua Persky, 51, says.
But after making headlines across the globe in 2008, it's hard to shed the image that became synonymous with a financial meltdown and ensuing recession.
Persky was an investment banker who found himself laid off in early 2008, though he expected he'd easily snag a new job with Bear Stearns. But then, in May, the investment house collapsed, taking most of Wall Street with it.
As layoffs mounted, Persky knew he needed to do something different to stand out in a sea of job seekers. "After being out of work for six months, I decided to do something a little more creative, so I put on a sign board and went out to Park Avenue to get some leads."
His sign, which read "Experienced MIT Grad For Hire" with his name and contact information, launched a media frenzy.
Despite only logging a few hours outside with his sign over the course of one week in June, the story spread around the globe.
But yet, no job offers.
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Comment: Going to MIT and study the false economics they teach there was the first misstep of this poor man.