Tuesday, February 19, 2013 at 3:00AM While I am not a fan of Glenn Beck, I am a fan of Jim Rogers. Nice interview. I am not as pessimistic as Mr Rogers as I am guardedly pessimistic.
Economics Monday, February 18, 2013 at 3:00AM 
There is no doubt that Lauren's interview skills is why I watch her. I saw three short videos that I thought might be of interest.
The first is a Lauren Lyster interview of Rick Rickerts, author of the book Currency Wars. This is particularly troubling as such "wars" were common during the Great Depression, and eventually led to a shooting war.
The second interview is a prediction that the Yen will become worthless—not worth less, but worthless.
The third interview is with John Maudlin, whom I will hear in person next week at a Palm Springs hard money "retreat." In the interview he was surprisingly optimistic with a prediction of American resurgence—if the deficit problem is solved. A mighty big if. But if this happens and everyone else does not solve their problems, then maybe he will be right.
In any event recently I have thought a lot about that old Chinese curse, "May you live in interesting times."
Economics Friday, February 15, 2013 at 3:00AM 
Republicans at the BeachThere is a lot of buzz in the blogosphere about the Republicans being tough and cutting spending. It is not for nothing that Republicans are called the stupid party. This is nothing less than allowing your opponents to set the rhetoric. The fact is that no prominent Republican not surnamed Paul has offered to cut any spending. The various Republican proposals are to grow spending a little more slowly than the Democrats. No cuts. They are allowing the Democrats to frame the issue as the “evil Republicans cutting spending on the poor.” The smart move instead would be for the Republicans to announce they were opposed to all cuts. Take the high road and announce that they want to help the poor just like was done in the previous year.
You Want Me to Cut What? The sneaky part about this is that it reduces spending more than the original proposal, but there are no cuts. Let the natural growth in the economy lead to a gradual reduction in the deficit. There are no booby-trapped stealth tax increases on the horizon. Submit the exact same budget as last year. When the Democrats complain just announce that the Republicans have already given Obama the tax increase he wanted. Announce that Republicans are opposed to spending cuts, then freeze the budget.
Will the Republicans do this? (Did they nominate a candidate who was extremely wealthy in a time of austerity? Did they nominate a candidate that was not particularly compatible religiously to a considerable part of their constituency?)
Will the Republicans do this?
No they are the stupid party.
Monday, February 11, 2013 at 3:00AM 
Laurence Kotlikoff, respected U.S. economist, makes the claim that the US is in worse shape than Ireland or Greece in this RT (Russia Today) interview. The issue is the off-the-books promises made to seniors. Kotlikoff's estimate of 200 trillion seems a little high. Most of the estimates I have read are about 100 trillion. But even if it is 50 trillion, this is more than can be paid. I am guardedly pessimistic so I expect that these obligations will be repudiated, saving the country the specter of default. This is not good news for the soon-to-be seniors. Wait, I am 58 ... This news is catastrophic.
Kotlikoff is quite polite in pointing out that most people have their heads in the sand like the clichéd ostrich. I would say he is polite as our leaders, and I am bipartisan in this, have their heads stuck in a different place.
I know I post a lot of videos, but this one is only 14 minutes. You need to watch this in order to understand the mess we are in.
I am hoping that the beloved editor of this blog, Pam Dewey, does not watch the interview, as her way of coping with depression over world circumstances is to post cute animal pictures on Facebook. This interview is accurate, dire, and depressing enough that we might have cat pictures for weeks.
Friday, February 1, 2013 at 8:54AM 
The idea that the economic troubles we are experiencing are actually greater than those during the Great Depression is a popular meme right now. It is difficult to know how true this might be because of the games the government plays with statistics. If inflation was calculated the same way it was in the 70's it would be over 5 %. I have seen calculations in the 7% range. Unemployment seems workable at under 8%—bad, but not horrible. But I have seen unemployment estimates that do not play the games of the government at 16%.
So are things as bad as the Great Depression?
Even with the contraction in GDP, (Gross Domestic Product) last quarter, no, not yet.
The main reason is the social safety net that has evolved over the decades. This masks the pain, and to a degree the US is wealthy enough to pay for it. But when the government borrows 40% of every dollar it spends, one has to wonder how long the perpetual unemployment checks and 20% of the population on food stamps can last. No one notices the modern equivalent of soup lines because it is hidden.
Things will continue as they are until they don't. Yes, I know that is not helpful. But as Yogi Berra said, it is difficult to make predictions, especially about the future.
What will happen if/when no one will buy government bonds?
If When that happens the US will be in a worse situation than the Great Depression.
What will happen then?
Who knows? It depends on the president at the time. It is also possible that point will never be reached. On this I am guardedly pessimistic.
But if you ask yourself a question I think you can make a good guesstimate as to what would happen when investors stop buying bonds. The question is, "What will benefit the bankers?" The answer to that question is what I expect to happen. Thus my prediction of more of the same.
However, I feel that the risk that events will get even out of the bankers’ control is a lot higher than they realize.
In the meantime, I am trying as hard as I can to get ready. How is your plan going?
