Yes, along with "job creation" the word "democracy" brings me close to puking.
As Bush touts spreading democracy abroad, we watch ourselves lose our own freedoms and liberties at home. But it’s all just an obfuscation of reality. The USA was designed as a republic, not a democracy and certainly not as an empire. Unfortunately, the rule of law and morality have been cast to the wind as our politicians use the ‘D’ word to justify their actions - telling us all the while that they are helping and protecting us.
But I believe we are reaching a point where there are some issues beginning to emerge that acknowledge the difficulty we have had in protecting our republic. This is evident when we see repeated lawsuits and appeals over Obama’s citizenship and legitimacy, we hear talk about pre-emptive pardoning of the CIA for the Gitmo scandals, and we see the utter failure of the SEC in spite of countless warnings. There are countless other examples of a failure to enfore the laws that we have created for oureselves.
It is my hope that we will use this crisis as a constructive opportunity to reassert some of the basic beliefs and principles that are universal to a republic. If we fail, we face eventually anarchy…and then??? History doesn’t treat failed republics nicely.
Young Chuckbought a donkey from a farmer for $100. The farmer agreed to
deliver the donkey the next day.
The next day he drove up and said, “Sorry, son, but I have some bad news.
The donkey died.” Chuck replied, “Well, then just give me my
money back.” The farmer said, “Can’t do that. I spent it
already.” Chuck said, “Ok, then just bring me the dead donkey.” The
farmer asked, “What ya gonna do with him?” Chuck said, “I’m going
to raffle him off.” The farmer said, "You can’t raffle off a
dead donkey!” Chuck said, “Sure I can. Watch me. I just
won’t tell anybody he’s dead.”
A month later the farmer met up with Chuck and asked, “What happened with
that dead donkey?” Chuck said, “I raffled him off. I sold 500
tickets at two dollars a piece and made a profit of $998.” The
farmer said, “Didn’t anyone complain?” Chuck said, “Just the guy
who won. So I gave him his two dollars back.” Chuck now works
as a consultant for Goldman Sachs, JP Morgan and the
US Federal Reserve.
"The signatures of a failure of US debt auctions would be rising rates and a falling dollar."
Would that be the T-bond or T-bill rates? If so, which ones and how would the yield curve look? Is there a simple trigger point, or is large amounts of due diligence required i.e. read all the economic news, read all the gurus, monitor $USDX hourly, ad nauseam?
I hold about 80% CEF currently, but it is irritating when the buck keeps going up more that it goes down
I don’t how O the messiah can save the U.S.A., especially with millstones like Congress, Treasury and the Fed to hold him back.
Curious how a Company with a poor (accrual accounting) balance sheet would be rejected by the simplest broker’s filter and how any financial investment with a NPV less than future income. And yet people still invest invest the good ole’ U.S.A.
Mike: excellent anectdote. When you think about it too much though, it’s not that funny.
T.C.: All I can say is that when short term T-Bills are 0% yield, they have no place to go but down. And when 30 year T-Bonds were at 2.5% I shorted them and made a bit on the recent drop. Cleary the T-Bills can’t stay this low forever, but the Fed has the most influence over short term rates. The longer T-Bond is likely to be more influenced by global issues, the energy crisis, and the like. All I can say is that when you look at a chart of 30 year Treasuries, we have never seen yields this low at least in the past 30+ years, even now as the yield has risen a bit recently.
I think that a significant rise in the Treasuries, particularly the longer term ones would basically coincide with the "recovery" (if we can call it that) / (hyper) inflation.
My hunch is we won’t see a dramatic increase in 30 year yields for perhaps a year. But I would say it’s inevitable in 2010 if not perhaps a bit earlier.
An interesting thing to watch will be the way the market reacts to the closely watched "first 100 days" of the Obama presidency. Simply because the anticipation of his presidency is so high, we could easily see some weird jumps and bumps in the first few months, but unless he really pulls a rabbit out of a hat, I suspect the crisis will reassert itself certainly by this summer.
But who really knows? We live in interesting times and it’s fascinating to study this as it happens. It’s a gift to know you’re living through history as it happens.
2008 has been a rocky year for many. With an ailing economy, viral job loss, busted mortgages, roller coaster oil prices and stock market and the consumer credit debt became pandemic for Americans. All I’ve been hearing about lately are industries asking for emergency cash amid a recession. It seems everywhere I turn there’s bad news about the economy or about payday loans. So I went in search of some good news. I knew there had to be some companies and industries out there that were doing well. Turns out, recession is actually good for some industries such as discount, retail and fast food. Particularly, places with dollar menus are doing very well. And, of course, as unemployment rises, so do video game sales. Some of the things in this article on the <a title="READ Who Doesn’t Need Emergency Cash?" rev="vote-for" href="http://personalmoneystore.com/moneyblog/2008/12/31/who-doesnt-need-emergency-cash/">payday loans blog</a> about industries that do not need emergency cash is somewhat surprising, though.
Would someone mind clearing me up quick on how inflation would work for people. I understand the effect that prices of goods will rise, but how do (or would) salaries rise? Would salaries stay more or less the same leaving us all unable to afford anything? Or would salaries start to see enormous increases (that of course are not really worth anything, only keeping up with inflation)?
Salaries will certainly rise, but they often lag rising prices, at least a little, which causes shorter term pain. Inflation by itself is not so much of a problem for society. It is the uncertainty that inflation brings. No one knows what to expect in the future and in the meantime people argue over prices, salaries, and interest rates. Far from destroying productivity altogether, high inflation generally results in zero unemployment. So your day to day life will change a little, but life will go on. The real catch is what inflation does to savings. If you don’t protect yourself buy getting assets not subject to US Dollar inflation, then the purchasing power of your savings will disappear very quickly.
As Chris points out, 2 factors drive inflation:
monetary expansion in the absence of comensurate growth in goods and services
expectations for what the future is likely to hold
As I understand it, hyperinflation is most often driven by number 2, whereas our historical inflation has mostly been driven by number 1. In this environment, though, where we’ve had a monetary explosion, you can be assured that when people start talking and expecting prices to rise then inflation will get very bad very fast. Historically, the change from deflation to (hyper)inflation has often happened very abruptly.
As high inflation "works" today, I’m told people in Zimbabwe get a paycheck and immediately spend all of it on goods, mostly food. They know if they were to save it, it would be worth a fraction as much the next day.
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