Ratings Agencies Make it Tough on European Leaders

The European leaders were battling a pretty major storm that the ratings agencies helped create late last week when S&P cut the ratings on 9 euro-region countries. The most dramatic move was the loss of France’s AAA rating, leaving Germany as the sole AAA rated country in the currency union. Austria also lost its AAA rating while Italy and Spain fell by two notches and Portugal’s debt was cut to junk status. The ratings of Malta, Cyprus, Slovakia, and Slovenia were also lowered.

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A New Theory of Government…

Not much to report from yesterday. Dow up 78 points. Gold bouncing around.

All eyes are on Europe. If the Europeans can pull off a save…well, we’re all saved. At least for a few weeks. Maybe through the holiday season.

The euro has been remarkably stable. It has never collapsed — despite all the talk of Europe falling apart. Apparently, people with money don’t think it is in real danger. They think it is too important to let go. They may be right. And the more people talk about the ‘end of Europe’ the more it doesn’t end. Instead of letting it go, the authorities become more and more stubborn in trying to hold it together.

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How Governments Distort the Value of Money With or Without a Gold Standard

Speculation is not the same as gambling. As our good friend Doug Casey, a perennial favorite at the Agora Financial Investment Symposium, likes to say, speculation is the act (some might say “art”) of “capitalizing on politically caused distortions in the marketplace.”

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Investing in Areas With Rapid Growth Potential

Dow up 80…oil still below $100…gold still below $1,500….

Oil has a long way to get back to its 2008 high. But it’s still 3 times what it was in 2005 and 5 times its price in 2001.

In the battle between inflation and deflation, it’s not clear to us who’s winning. Prices are rising, but in the context of a general deflationary funk. Try as they might, the feds just can’t shake the Great Correction. It leaves them struggling to loosen monetary policy to free-up the economy…and succeeding only in tightening the noose around the consumer’s neck. Here’s the AP report:

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The Long Legs of the Silver Rally

US Special Forces put a bullet through Osama bin Laden’s head yesterday. Unwittingly, this elite fighting force may have also thrust a stake through the heart of the silver market.

We will leave it to Wolf Blitzer and other world news commentators to articulate the geopolitical significance of bin Laden’s rendezvous with 40 virgins. Our beat is financial…and in our little corner of the news world, the death of bin Laden seems like a perfect excuse for a long-overdue dollar rally…and silver selloff.

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Putin Calls “Hooliganism” on US Handling of the Dollar

This week — just as Standard & Poor’s lowered the US debt rating outlook to negative — Russian Prime Minister Vladimir Putin has swept in to point out that when it comes to monetary policy, the shoe’s on the other foot now. Russia has had a much challenged record for managing the ruble, with seven redemominations in the twentieth century — most notably during the 1998 Russian financial crisis – so perhaps Putin has a good sense for smelling one coming ahead in the US’ future.

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No Inflation in Sight

In response to the recent multi-month, multi-year and all-time highs posted by the Dow, oil and gold respectively, your suitably-entertained editor last week remarked, “Good Golly…what isn’t going up?!”

Indeed, commodities across the board are on the march and prices from the grocery store to the gas pump are beginning to reflect that reality. One headline we saw this morning called for “$5 gas by Memorial Day.” According to the Lundberg Survey, the national average for a gallon of regular unleaded as of Monday was $3.76…and rising.

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Stopping Inflation, the Federal Reserve Way

I was explaining to my boss that firing me would not solve the company’s problems, as the corporate rot goes a lot farther than that, mostly due to the stupid Human Resources department hiring so many morons, a dismal fact I have proved over the years by merely asking each one, in turn, “Do you own any gold and silver to protect yourself from the horrendous inflation in prices that is guaranteed by the evil Federal Reserve creating so impossibly much money, and which will destroy the currency, the economy, and everyone who is not an owner of the aforesaid precious metals, to wit, gold and silver, or are you some kind of moron?”

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Dice Have No Memory: An Introduction

It was 10 years ago, or a bit more, that I began writing the Internet series called The Daily Reckoning. The collection of essays and short notes you have in your hands developed over the course of the years that followed.

When I began, I was ahead of the innovation curve. I was blogging before blogs had been invented. Day after day, I watched what happened in the world of finance, economics, and politics. And day after day, I found myself entertained. I merely described what I saw happening.

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