It was a pretty busy day in the currency markets yesterday, so there is thankfully plenty to write about, this morning. The dollar has continued its slow retreat from Monday’s spike when the dollar index traded at the highest level since February 22. The big move higher by the dollar was the result of renewed fears of a eurozone break up and a downgrade of some major European banks, but leaders of both France and Germany have been working hard to assure investors the euro is here to stay. Our own Treasury Secretary Tim Geithner is in Europe today to throw his two cents into the discussion. I guess he certainly knows a lot about unfettered accumulation of debt, but I’m not so sure he knows how to bring deficits back under control. Like I said, there is plenty to talk about in the markets this morning, so let’s get to it.
[Read more...]Is the US Approaching the End of an Economic Growth Spurt?
As you know, we’ve been wondering about the exhaustion of the Industrial Revolution innovation…and the bankruptcy of the Social Welfare state as a result.
We take for granted that a healthy economy ‘grows.’ Our governments depend on it to pay the bills. Our investments depend on it too; we buy investments that we hope will become more valuable as sales and profits grow along with the economy. But what if all of our assumptions about what is ‘normal’ are wrong? What if the growth spurt we have known for the last 300 years was the exception, not the rule? And what if it were now coming to an end?
[Read more...]First Quarter GDP Comes In Lower Than Expected
This week shaped up to be one of the busiest on record for all of us here that I can remember as the market volatility and plethora of data provided us with endless excitement. As we close the books on April, the dollar saw increased selling pressures with several currencies setting new records, gold and silver trading at or through all time highs, and the euro (EUR) knocking at the door of 1.50. We’ll see if this carries over into May or if there’s some type of circuit breaker, such as Europe’s debt problems, that re-surface in order to keep the dollar from hitting the floor.
[Read more...]Why Bernanke’s attempts to fix the economy are only a façade
America has an economy that produces about $13 trillion of activity each year. America also has a Federal Reserve Chairman that produces about 13 trillion raised eyebrows each year.
Last week, in Jackson Hole, Wyoming, Bernanke raised a few more eyebrows by asserting that the Federal Reserve remains in control – more or less – of economic conditions here in the United States.
[Read more...]The Economic Recovery Flop
Nothing special happened on Friday. The Dow lost 21 points. Gold gained 7, to bring it back over $1,200.
Here at The Daily Reckoning our annoying forecast is that gold will fall. So will stocks.
It's annoying because 1) both have been going up…and 2) we still think you should go with gold anyway.
[Read more...]Government Spending and the Façade of a Successful Economy
I've got to admit it's getting better…
A little better all the time.
– The Beatles
Another Monday…another week… Are we getting better?
And what will this week bring? More evidence that things are improving?
On Friday we got word that consumer sales had fallen in May…from the month before. That is, they didn't get better; they got worse.
[Read more...]Why the Gold Price Rises on Good News and Bad
Can you still buy a sports car for $10,000? We bought our first real automobile for $78. It was a ’37 Plymouth. Beautiful car. All original. And it ran well…for a while. We were only 16. We didn’t have a driver’s license yet, but we were getting ready.
Then, the first real, roadworthy automobile we bought – at 17 years old – was a ’61 MGA. Remember those? A little British sports car. A two-seater. What fun we had with that! We would play hooky from school, for example, and drive down to Chesapeake Beach. Or, we drove into Washington, DC, where we claimed to be over the legal drinking age and nobody asked any questions anyway. Or, sometimes we just drove around with the top down.
[Read more...]
Economic Growth According to the World’s Leading Economists
We were on the edge of our chairs yesterday. We wanted to see if the Dow would crash through the 10,000 barrier. A break below 10,000 would probably hit the markets like a drone attack on a birthday party…
…perhaps causing investors to panic…and the feds to do something really stupid.
[Read more...]