The New Economy – Food banks, panhandling, and down time

Instead of writing about how many times Ali Velshi can be wrong and still have a job, I thought better to not focus on the negatives and instead start getting into the mindset of Disintegration 2010.

Dow Now and Then

BUY WHEAT. BUY GOLD. BUY SOUP.

WHEAT COULD REACH NEW HEIGHTS IN 2009

Droughts this year are going to squeeze already tight global wheat supplies. Parts of the US are severely dry like Texas and California. Elsewhere, China, Australia and eastern Europe are all experiencing extreme droughts. Financial mayhem has made it impossible for farmers to get credit for fertilizers so even with adequate rain, yields will be reduced. Another factor killing incentive to expand acres is the lower price compared to 2008. Liquidation continues with still almost 50% of open interest in wheat futures held by funds. A wild card is the stem rust fungus threatening wheat crops in Africa and moving west appearing in Iran. This is the making of another perfect storm with potentially devastating effects worldwide. Global stocks of wheat have recently come off 30 year lows. Even a modest reduction in 2009 yields could just be the trigger for civil unrest and mayhem. There are only 12 weeks of slack in the system. That’s it. It is not a pretty picture going into the summer of 2009.

Tea Party 2009, Chicago style

What will be the trigger in the US as this financial dustbowl bears down? Rick Santelli? Glenn Beck? When do people here just say enough is enough? Obama is now snowjobbing the cable outlets by throwing out some raw beef in the form of mortgage backstopping while they sneak through another 800 billion to aid swimming pool builders and teen STD angst. This is just like the auto sector snowjob which was highly effective in diverting public discourse away from TARP (trillions) and onto a pint-sized (10s of billions) problem.

If there is going to be a Tea Party 2009, it better happen quick because we’ve crossed the high water line on this river of debt.

Rick Santelli, you’ve got some momentum. The people are listening

Gold and Silver go Bonkers – Time 1980

A guy named AmericanPatriot posted this on Marketwatch:

“Gold and Silver Go Bonkers” TIME

“In one hectic week, the long surge in gold, silver and other precious metals crested into a wild pay-any-price frenzy. While bullion traders from Hong Kong to Zurich to Kansas City gaped in amazement, panicky investors big and small reacted to the worsening turmoil in the Middle East and the increasingly troubled world economy. They sent precious metal bars, coins and trinkets on the most dizzying roller-coaster ride in memory. Prices touched levels that were inconceivable a few months ago. Said a New York commodities expert, George Clarke, in a revealing if overwrought explanation of the market’s extreme volatility and nervousness: “In my opinion what is happening is that the world is looking at World War III.”

On a single day, gold climbed $74.50 per oz., or more than twice its total value as late as 1971. During the week, it climbed an incredible $148, to hit $660 per oz. before slipping back suddenly at week’s end to a still dazzling $603, or an overall gain of 18% in only five days.

The sell-off was spurred partly by rumors that the U.S. was planning a surprise gold auction of as much as 6 million oz. in an effort to break the price runup. Though the Administration denied the rumors, the U.S. could well afford such an auction. The nation’s gold reserves are still far and away the largest on earth, totaling some 276 million oz. At last week’s closing price, the reserves were worth some $165 billion, or more than twice as much as those of second-ranked West Germany. By comparison, the Soviet Union’s official reserves, though never disclosed, are estimated by the U.S. Central Intelligence Agency to be less than 45 million oz.

…full article

Coming soon to America

thousands protest in Marseille - BBC

If only the French had bean burritos and cablevision to keep them where they belong instead of being out on the streets stirring up trouble with the bankers and government facilitators. If only the French had 24 hour news channels to keep informed on stately matters like teen tot baby killers instead of getting all roiled up about these inane bailouts. But they don’t – and they are furious. One million protesters took to the streets all across France, yet few outside know. Other than a brief report on BBC, no major news channel in the US reported on this event.

From the BBC:

Huge crowds have taken to the streets in France to protest over the handling of the economic crisis, causing disruption to rail and air services.

Unions said 2.5m workers had rallied to demand action to protect wages and jobs. Police put the total at 1m. …more here

All roads lead to gold

Don’t be so sure to call a short term top in gold just because some hedge fund bought on grandpa’s recommendation. Private sector funds are furiously swapping paper for safe havens before the iceberg bid from Team Hope is pulled. After the grand mugging of 2008, the master financial planner of working class America will have levered their future with insolvent firms and fraudulently valued paper. So while the public’s wages of tomorrow are tied up in this ingeniously malicious buy-and-hold, financial institutions position themselves and their new-found liquidity for the final take down. They have backed up the truck and are loading up on precious metals WITH YOUR MONEY!

Team Hope is set on a course of feel-good inflation. Equities, real estate, and wages may eventually rise but lost purchasing power will be devastating, more than offsetting paper gains in 401Ks. The desperate attempt to shore up equities is an act meant only to quell civil unrest. The banking elite know how difficult it will be to enjoy their booty when their cleaners, drivers, chefs, and groomers are setting the streets ablaze.

Educate yourself and don’t be a fool. If the elite control gold they control you.

Trust not the only thing to have fallen catastrophically

Don’t expect events like what is happening in the EU to be reported on when they occur here. Remember those Wall Street protests back in October? Didn’t hear about them? The best reporters cover entertainment not politics.

With the US and EU issuing more and more debt that creditor nations are unwilling to finance, who ends up buying all of these corporate and government bonds? Well, the issuing body buys them up with freshly minted fiat. Money printing on a global scale has only served to slow the decline in value of paper assets.

From the Telegraph:

Monetary union has left half of Europe trapped in depression

By Ambrose Evans-Pritchard

Events are moving fast in Europe. The worst riots since the fall of Communism have swept the Baltics and the south Balkans. An incipient crisis is taking shape in the Club Med bond markets. S&P has cut Greek debt to near junk. Spanish, Portuguese, and Irish bonds are on negative watch.

Dublin has nationalised Anglo Irish Bank with its half-built folly on North Wall Quay and €73bn (£65bn) of liabilities, moving a step nearer the line where markets probe the solvency of the Irish state.

A great ring of EU states stretching from Eastern Europe down across Mare Nostrum to the Celtic fringe are either in a 1930s depression already or soon will be. Greece’s social fabric is unravelling before the pain begins, which bodes ill.

Each is a victim of ill-judged economic policies foisted upon them by elites in thrall to Europe’s monetary project – either in EMU or preparing to join – and each is trapped.

As UKIP leader Nigel Farage put it in a rare voice of dissent at the euro’s 10th birthday triumph in Strasbourg, EMU-land has become a Völker-Kerker – a “prison of nations”, to borrow from the Austro-Hungarian Empire…

..read more

Update for Jan 20, 2009

Looks like more trouble for debt issuers as the first German government bond auction for 2009 failed to attract bidders

A German sovereign bond auction failed on Wednesday as investors shunned one of the most liquid and safe assets in the world in a warning for governments seeking to raise record amounts of debt to stimulate slowing economies.
…read more