Global economic situation for liveaboard cruising yachties

[Bamby]

The Reasons for Gold’s Explosive
Rally Are Not All That Different From
The Forces behind Its Past Rallies.

They’re Just 100s of Times More Powerful!

For the last 5,000 years, gold has been propelled higher by many of the same causes. Today, the reasons are …
Gold Bricks

1. Paper money is being systematically devalued by central bankers and politicians, especially in the U.S.

2. The private sector and investors are losing confidence in governments all over the world.

3. Geopolitical strife is more prevalent than it has been in the last 30 years.

4. The wild, out-of-control spending and debt accumulating that’s ingrained in today’s culture, especially in the U.S.

5. A massive explosion in income growth in other parts of the world. In the 19th and 20th century, that was the industrialization of Europe and the U.S. In the 21st century, it’s the same industrialization, but of Asia, and nearly 60% of the world’s population — and where more than 80 million new middle-class families are being born each and every year!

But one of the keys to understanding gold today — and indeed, virtually all natural resources — is to understand how the public has gotten burned by paper in the past. So let’s take a walk into just the recent past and look at some recent examples …

The Time: The Middle of 1998
The Places: Thailand and the former Soviet Republic

Strange bedfellows you might think. But not really. Moscow was reeling under an estimated $150 billion worth of publicly issued IOUs, debt they had accumulated when the Berlin Wall fell and the former Soviet Republic turned into a splintered group of free-market Russian states.

The debt, mostly issued with the intent of building infrastructure for the new Russia, was for the good of the country’s new 146 million capitalists.

However, corruption at so many levels in the government resulted in waste and bureaucratic nightmares. Projects either never got off the ground or ended up lining the pockets of the oligarchs who effectively printed their own money with assets previously owned by the state.

End result: The sovereign debts of the new Russia quickly went bad, and for the next five years Russia collapsed into turmoil.

Though almost a world away, it wasn’t much different in Thailand. The country’s economy was cooking in the earlier part of the 1990s. Gross domestic product was jumping at an average rate of 9% a year.

So the country borrowed money, lots of it, to expand even more. Public officials and those quickly getting wealthy in Bangkok were all thinking the same way.

In fact, so much money came into Thailand that the Thai baht was strengthening quickly in local markets. Yet it remained tied to the dollar, which at the time was also rising in value. So with a currency too strong, the economy suddenly became uncompetitive in the region.

Billions of dollars borrowed and bet on the future were suddenly at risk. The economy continued to slow to such a point that there was only one option for authorities and regulators: Bust the Thai baht loose from the dollar and let it float freely on foreign exchange markets.

Give the system some flexibility and let market forces take over.

It was good thinking and the only choice the authorities really had at the time. But what they didn’t realize is that confidence in the government had already been lost. Investors felt insecure about debt issued by the government.

End result: The baht collapsed, soaring from 28 to the dollar to 58 overnight. Capital stampeded out of Thailand like there was no tomorrow. The economy collapsed, shrinking almost 50% in no time at all. Bonds and other debt offerings went bust. And the International Monetary Fund had to step in and bail out the country.

Moscow and Bangkok … strange bedfellows no doubt … totally unrelated at first glance. But in both cases, simmering below the surface, were excessive debt levels going bad. Paper assets went up in smoke. And investors got burned. Big time.

Another example from just a few years ago …

The Time: 2000
The Place: New York

The Nasdaq hit 5,132 in March 2000, up 1,489% from its low of 322.93 in October 1990. Dotcoms were everywhere, all the rage. Investors couldn’t care less about brick and mortar companies with real assets, with real three-dimensional products for sale.

All they wanted to know was how many eyeballs are looking at a web page at any given moment. All they wanted to know was how many clicks a link on a website got. And all they wanted to know was the latest dollar figure being assigned to such numbers. They multiplied them out and got the stock price. Forecasts kept getting raised and share prices kept going up.

But suddenly reality set in and investors took a breather. They thought about what they were doing. They woke up and smelled the coffee, prodded no doubt by disasters such as Enron and WorldCom. They started to ask themselves what the heck they were really buying.

And voila! The assets suddenly collapsed virtually overnight, in the worst stock market crash since the Great Depression. Paper, in the form of stock certificates, crumbled in value.

Now, fast-forward to today …

The Time: 2009
The Place: All over the U.S.

The problem: Subprime mortgages … prime mortgages … bad real estate … corporate debt to the tune of $7 trillion … Federal debt to the tune of $125 TRILLION.

It’s not so much that real estate prices collapsed under the sheer weight of the debt. Believe it or not, that was only the trigger and prelude to a much deeper debt crisis that is now beginning to emerge.

And it’s not so much that we have to compete with Chinese products when it comes to manufacturing and exporting our own goods. Or with Japan. Or Vietnam.

It’s not any one single cause that has led the U.S. to where it stands today.

It’s a series of blunders made by all of us … from Washington to Main Street. And it’s created a debt pyramid that is now the largest that civilization has ever witnessed … and, it’s crumbling before our very eyes.

Is it any wonder that the U.S. dollar, once the most respected currency in the world, has been losing its value virtually non-stop?

Is it any wonder that December gold has now pierced the $1,100 barrier?

Is it any wonder that gold is now being rediscovered as the hard currency it has always been?

Is it any wonder that virtually all natural resources under the sun are acting like tangible assets should … rising as the dollar crumbles … and as investors start to shun paper assets?

http://www.uncommonwisdomdaily.com/h...ins-out-4-7476

[Bamby]

ABU DHABI (Reuters) – A Federal Reserve official said on Monday that the U.S. economy still faced "significant weaknesses" and urged policymakers to allow large financial institutions to fail if needed.

"We still have significant weaknesses to work through in the economy in the U.S. and coupled with a rapidly rising level ... (of) debt and enormous moral hazard issues, we have a great deal of work ahead of us," said Kansas City Fed President Thomas Hoenig.

Data showed last week that U.S. consumer sentiment had soured in early November on grim job prospects while a larger-than-expected trade deficit had analysts scaling back estimates for third-quarter U.S. growth.

Turning to regulatory issues, Hoenig said that all financial institutions needed to be allowed to fail, no matter their size.

"As we look at reform and the way forward I think the most important think we need to do is to make first of all an accurate assessment of fundamental weaknesses in our financial system and then begin to create better foundations," he said.

Hoenig was speaking at a central bank event in Abu Dhabi, the capital of the United Arab Emirates.

"Our institutions must be allowed to fail no matter what their size or political influence," he said.

U.S. regulatory agencies have been embarrassed by flaws in financial oversight that failed to prevent a financial crisis that has triggered a painful recession, cost millions of jobs, and required hundreds of billions of taxpayer bailout money for banks.

The Fed has drawn sharp criticism from some lawmakers for its handling of the financial crisis, particularly its controversial decisions to extend emergency loans to large firms such as insurer AIG, which it did not directly supervise.

"Our reluctance to deal with 'too big too fail' provides these largest institutions with important advantages over any competitors who are not seen as important," Hoenig said.

Hoenig also put the spotlight on credit ratings agencies, saying policymakers needed to examine fee structures and incentives, calling into question how the agencies earned fees from the companies they were supposed to rate in an objective manner.

"Even if we put regulatory restrictions on the rating agencies trying to make them behave, incentives overwhelm (the additional safeguards). Incentives always overwhelm," he said.
http://news.yahoo.com/s/nm/20091116/...usa_fed_hoenig

[masalai]

http://www.gata.org/node/8033 "Now Bernanke says he too supports a strong dollar" - - What code is that for? Oh yes the ******** is at last going to '...stop-supporting-the-dollar-by-massive-sales-of-gold-that-the-US-does-not-have...' or some such frickin idiocy....

http://www.gata.org/node/8034 "Bernanke tries to talk the dollar back up" - - The "dog" is dead, for pity's sake bury it....:$:

Nice posts there Bamby... But I fear the issues covered are only scratching at the surface... Underneath the thin protective hard surface layer is a seething mass of destructive **** ready to consume all...

[Boston]

Ya, I appreciate that Frosty but my English grammar is not so much.
( ps I used spell check three times in that one sentence )
its all good
I got a editor if I really want to put out anything serious

[masalai]

http://www.caseyresearch.com/displayCdd.php?id=278 - - the part after where he did not kill a cat in his backyard....
http://www.gata.org/node/8035 "Russian central bank ready to buy any gold from state depository"

[Landlubber]

Boston,

Don't loose any sleep over your English mate, we can all understand you. I wish I could use another language as freely as you do....keep up the good work.

[masalai]

http://www.gata.org/node/8037 "Wall Street Journal: A dollar warning from Asia"
http://www.gata.org/node/8036 "Gartman cites GATA on CNBC, asks: Who cares if gold is rigged?" - - That has to be the comment of an idiot, - It means that the whole market will soon be rigged and will serve the few manipulators in their profiteering but destroy the market - Just think a tiny little bit - A RIGGED market is NOT a MARKET...

http://www.moneymorning.com.au/ the email content is more interesting - free subscription (paid for by advertisements - so what isn't)
http://www.dailyreckoning.com.au/ likewise, the email content is more interesting - free subscription (paid for by advertisements - so what isn't)
From Dan Denning at the Moon Factory:
--So this is what it feels like in an inflationary melt up. House prices were up 6.2% in the third quarter over the same time last year, according to data from the Australian Bureau of Statistics. House prices in the capital cities are surging. Stocks are surging. Gold and oil are surging.
--And counter to our prediction of an imminent, counter-trend U.S. dollar rally, the dollar is most definitely not surging. Take a look at the chart below. We've been writing about the decline of the dollar for nigh on ten years. So we looked at a ten year chart to tally up the damage. It is considerable.
Dollar Index Threatens New Lows
http://www.dailyreckoning.com.au/ima...91117A_lge.jpg

And now over to Bill Bonner in London:
We got back from South America on Friday...ready for a rest. So, we spent the weekend reading...and occasionally, thinking.
What we've been thinking is that the dollar is dead meat in the long run. But in the short run, it might have enough life in it to bite investors on the derriere.
The US stock market rose 73 points on Friday, to bring the Dow just 30 points south of the 10,300 mark. Why is this level important? It's not really. But it reminds us that this is still just in "bounce range." Big drops in stock prices are followed by bounces - always. A bounce of 50% of what was lost is not unusual. That's what happened after the Crash of '29, for example. So, there's nothing exceptional about what we're seeing on Wall Street. Our comrades over at The 5-Minute Forecast provided this sobering chart:

[masalai]

http://www.gata.org/node/8038 "Mauritius buys 2 tons of gold from IMF" - - - - - My big question is - - Will Australia buy back the gold that little Johnny Howard gave away (sold at the bottom of the market), at the behest of idiots like the shrub, whom he still seems to worship and grovel at his feet...

They have TV where you apes are? Try the HIstory Channel's WWll in HD series this week. ****, tho the footage was recovered from throughout the world, a disproportionate amount had something to do with US GIs dying for other peoples - must have just been "Day One" of the documentary. I am certain that we'll now see how the rest of the world saved the septics from the Axis...(and check out Churchill and his speech on "Saving the Island" and compare to yourself today)

[masalai]

Going through some recent posts/links and was astounded, and then found this today http://financialsense.com/fsu/editor...2009/1116.html and caught the urge to post, by this line.....
The unregulated derivative market is now 55 times the size of all the world's GDPs 600 trillion in total http://financialsense.com/fsu/editor...2009/1116.html - - To quote our Pauline Pantsdown, and her namesake, Ms Pauline Hanson, a good partner for mark & politician of some notoriety in Australia, "Please Explain"... Derivatives in USA have achieved a size that is 55 times Global GDP - - Who the **** is so stupid to trade NOTHING and run it up to US$600trillion, - - - MADNESS, just plain MADNESS prevails in USA - - The land of 308million people hiding in caves, blind, dumb, idiots or cretins all - - - and maybe 100000 saw it coming and in frustration set up blogs and vented their anger to each other - - I hope the 100000 manage to escape the madness and leave the rest to rot and eventually fertilise the soils of that once great country...

According to Table 3 http://www.occ.treas.gov/ftp/release/2009-34a.pdf 200 trillion of this toxic mess reside here in US banks. but could, in reality exceed 1,600 trillion that must return to USA for settlement. The subprime mess was 1.5 trillion & blew up the economy. USA now has wave two of the Alt-A and Option Arms rolling to shore. Another 1.5 trillion. A lot of this consists of NINJA loans. Those are no income, no jobs, no ask.?

The graphic at the end will put some perspective in the matter... http://financialsense.com/fsu/editor...2009/1116.html

All I can say is USA is living in fantasy land, escape whilst you can and GB is mighty close, The question that could concern everyone else in the world is who else will be sucked down when these two fall

http://en.wikipedia.org/wiki/World_population USA is a small fry now, and the diminishing value of the US$ is making the USA presence to be seen to be fading even faster - - Fallen about 40% since March 2009 and going down ever faster...

I've pointed this out to you before but doesn't it seem a bit hypocritical that you can harp about how unimportant the US is thenwithouttakingabreath bleat about the US dragging the world down with it? Your mind went AWOL some time ago, didn't it? Sorry, not because of your dementia but for your age, I should be gentle, you damned fool, but a beating about the head and neck seems to be what you enjoy...

[masalai]

mark, I feel sorry if you perceive things as such, but that 300million people are blind to the facts and remain in denial begs one to wonder and be incredulous at this continuing state of complacency and acceptance of being fleeced, robbed, sold down the drain and otherwise screwed... AND STILL do nothing about it Is this a trait only to be found in USAnians?

http://www.abc.net.au/news/stories/2...section=justin "Australia is 8th least corrupt country" - - - Open-mouthed disbelief Then again "people power" has a positive effect, seemingly lost in some complacent countries...
http://www.abc.net.au/news/stories/2...section=justin "Man rings triple-0 from hospital bed" - - - (000 is the fire/police/ambulance emergency phone number in Australia) - One way to get attention when the nurse does not respond A better outcome than enduring and litigation later (posthumously)?

[masalai]

http://www.theaureport.com/pub/na/3289 "Louis James Shares Some of the "Best of the Best"" - - - - - - - " - - - In this exclusive interview with The Gold Report, Louis James, Senior Editor of Doug Casey's International Speculator, reiterates his conviction that the dollar is on death row with no one prepared to grant a stay of execution. Dismal as it is, this situation gives rise to increasingly positive prospects for gold and other commodities that may ultimately stand in as the world's reserve currency. And there are some pretty hot speculative prospects—Louis' "best of the best" —waiting in the wings for the market's next big leg down that he's been forecasting. - - - "

http://www.theaureport.com/pub/na/3294 "Strong Dollar Policy: What??"

[masalai]

http://www.gata.org/node/8041 "Gene Arensberg: Big gold and silver shorts starting to retreat" this could be interesting? precious metals may trade on their merit?
http://www.caseyresearch.com/displayCdd.php?id=279 - - - Always a good read...

http://www.elliottwave.com/ezine/ind...ne_111709.html

http://www.gata.org/node/8042 "Everybody wants a strong dollar -- except, it seems, its own issuer" - - - One can only wonder, shrug, and walk on... If you read the quotes carefully, the implied was that let things happen as the market determines, with a very positive spin but no more ... Very carefully chosen words (was the original quote in English or a translation If those quotes are accurate, then "let it float and let the market decide" could also be a valid interpretation - is this the beginning of the "exit strategy"

The full text, in the language that was used by European Central Bank President Jean-Claude Trichet said, on Tuesday would be very interesting and worthy of serious analysis/interpretation... Help please...

[masalai]

All the regulars I read seem to be "on recess" or "dead-flabbergasted" at the arrogant idiocy of the Keynesian economic analysts... The http://financialsense.com/Market/wrapup.htm essay suggests to me that the Keynesian trained dolts still believe in free money and never-ending profits from inflation and capital gains... Who then is making stuff Who is investing in corporations that can make something NO ONE because they do not have a high enough profit margin...

Michael J's Fantasyland is alive and well inside the soul of all who worship the gods of "fiat money" and the biggest god is the US$ - just another wet dream... - - They will wake up soon and realise they have wet the bed and **** themselves...