After the tumultuous years of the Great Recession, a battered people may wish that 2011 will bring a return to kinder, gentler times. But that is not what we are predicting. Instead, the fruits of government and institutional action – and inaction – on many fronts will ripen in unplanned-for fashions. Trends we have previously identified, and that have been brewing for some time, will reach maturity in 2011, impacting just about everyone in the world.
[Read more...]Bullish Indicators Not Bullish Enough to Indicate Recovery
December 16, 2010 by Leave a Comment
We live in the immediate…the urgent…the here and now…with the noise of the headlines and the blustery winds of current opinion…
Yesterday, the Dow lost 19 points. Gold lost $18.
But nobody cares what happened yesterday. People want to know what is happening right now. When they enter an elevator, they reach for their cellphones and Blackberries and check to see if they have messages…or if something important has happened.
[Read more...]No Admitting Defeat: Fed to Fight Failure With More Stimulus
December 15, 2010 by Leave a Comment
“Shoot, if you must, this old gray head,
But spare your country’s flag,� she said.
A shade of sadness, a blush of shame,
Over the face of the leader came;
The nobler nature within him stirred
To life at that woman’s deed and word:
Observing the Spread of the Sovereign Debt Crisis
December 1, 2010 by Leave a Comment
Do you have some protection, Fellow Reckoner? An escape plan? A little hideaway in some tropical clime? Some shiny stuff under the mattress?
Good. Remember: When it comes to the theater of global economic collapses, it is gold that buys the best seats in the house. Of course, you could always just watch the show from a deserted beach somewhere, lazing in a hammock with a long book and a broad smile.
[Read more...]A Century of Money Mischief
December 1, 2010 by Leave a Comment
On precisely the same weekend in November as the Republican victory parties in and around Washington, the Fed celebrated its centennial far away from its DC home at Jekyll Island, Georgia. One hundred years ago, seven US Congressmen and bankers gathered together in secret at this highly remote location to lay the political foundations for what would become, in 1913, the Federal Reserve Act. The ostensible purpose of creating the Federal Reserve was to provide for greater financial stability in the wake of the US banking panic of 1907. So how has the Fed fared in this role?
[Read more...]The Rise and Fall of the American Middle Class
November 29, 2010 by Leave a Comment
There’s a sturdy old building in the east end of Pittsburgh. It’s located between two major streets, Centre Avenue and Baum Boulevard. It backs up into a hollow where there’s a railroad spur. From the train tracks in the hollow to the roof, the structure is about 125 feet tall. The building covers a city block. It was constructed in 1914 by the Ford Motor Co.
The Old Ford Plant — in Pittsburgh
Cutting Expenses to Borrow More Money
November 29, 2010 by Leave a Comment
It is very cold in London. “This is the coldest it’s been in 25 years,� said a colleague.
People are bundled up in scarves and hats. There are patches of ice on the sidewalk. Heck, it could be Baltimore or New York.
London is usually milder. It snows occasionally, here. But rarely do you get such a severe cold snap.
[Read more...]On the Destructive Part of Capitalism
November 24, 2010 by Leave a Comment
When we are in a thoughtful mood, we try to get out of it as soon as possible. Nothing like thoughts to trouble a man’s sleep.
But sometimes a thought gets a grip on us and we can’t get rid of it until we’ve meditated, prayed, and drunk a whole bottle of Bordeaux.
Thus it was that we were puzzling over the strange events of the last few years. Why was Ireland so desperate to save its banks? Why did the US rush to keep Fannie and Freddie out of juvenile detention? Why put at risk the entire world financial system in order to try to get US employment down from 9% to 6%?
[Read more...]Debt Delenda Est
November 19, 2010 by Leave a Comment
The subject is debt; it needs to go away.
Debt was the market’s bête noire, this week and last. In Europe, it snatched up the Irish and carried them off. Then it attacked the Portuguese. Everyone knew the periphery states were going broke. Their cost of borrowing soared. Then, when the search parties reached them, the Irish turned them away. Debt has it usefulness, the Irish figured. They held out until Wednesday, apparently negotiating terms of their own rescue.
[Read more...]
US State Revenue Down a Third While Spending Increased
While US state governments continued spending at a voracious rate in 2009, recent US Census data that shows state tax revenue was plummeting, down almost a third.
The states were only able to finance their largesse via American Recovery and Reinvestment Act stimulus funds provided by the federal government. However, many of its provisions will expire this year… and the feds would have a tough time affording its marked level of support much longer anyway.
[Read more...]Click for detailed story