Though SocGen is a French bank, Mr. Edwards is based in Britain. It is there he has developed a reputation as "the City of London's best-known permabear" (via The New York Times).

Also via the NYT, Mr. Edwards has called for "a stock market collapse of at least 60%, followed by years of inflation of 20% to 30% as the persistent printing of money by central banks desperate to improve the situation sends prices soaring."

Lately, though, the 60% target has been modified. Now Mr. Edwards, a friendly fellow known for his "sandals and chuckling demeanor," is calling for an even larger drop.

The new downside target? A toe-curling 400 on the S&P, or roughly a 70% fall from recent levels.

Wild predictions aren't meaningful in themselves, of course. With all the analysts out

The reporter, Adam Johnson, describes how the Chinese government is building massive cities that no one lives in yet. The expectation is that China is going to "grow" into these cities.

A remarkable idea, really. The authoritarian planners in Beijing or wherever decide it would be good if, say, a million people or more could relocate to a pre-planned area.

Then they build out the infrastructure -- or rather the entire metropolis, skyscrapers, stoplights and all -- and wait.

(Click to enlarge)

Stop for a moment and ponder how nutty this is. The last time your editor checked, central planning was not a huge success. According to history, bureaucrats wielding directives over long distances tend to allocate resources poorly.

But are ghost cities a recipe for a

The few who can understand the system will be either so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while, on the other hand, that great body of people, mentally incapable of comprehending the tremendous advantage that Capital derives from the system, will bear its burden without complaint and, perhaps, without even suspecting that the system is inimical to their interests.

...while Europeans no longer fear foreign armies, they are starting to fear foreign bondholders. Europe's existence as a "lifestyle superpower' has depended on an ample supply of credit...

Marc Ostwald, Monument Securities:

...this is just another example of a short-term, leveraged solution, that merely adds to the burden of future problems...

Roughly one week ago Jean-Claude Trichet, aka "Mr. Euro," was telling the world there was no way the ECB would go nuclear. Then, over the weekend, they went nuclear.

Rather than dropping an atomic bomb, however, Europe dropped a money bomb on the markets – a rescue package worth some $962 billion, give or take. The package included authority for the ECB to wade into the markets and directly purchase debt.

It was as if the hapless trio (Merkel, Sarkozy and Trichet) had read Friday's Taipan Daily, "Why the Euro Must Die (To Save the

The problem is classic, and long ago highlighted by Austrian economics. Building up a lot of debt, to make a slightly crass analogy, is like putting on a bunch of weight. It’s hard work getting the debt off – the same as it is taking weight off.

The way to lose weight is to eat right and exercise. The way to get out of debt is to cut back on spending and increase productivity.

But when an economy is already weak and sick it’s very hard, if not impossible, to cut back on spending easily… just as it’s

But you know what would be really great to see? A futures contract that rises or falls with the reputation of central bankers.

Someone smart (like Robert Shiller) should create the “Federal Reserve Good Will Index,” to measure popular sentiment toward the Chairman of the Fed. Then the Chicago Mercantile Exchange could set up a contract that traded off it.

I wish they had done this years ago. If they had, I would have shorted the daylights out of Alan Greenspan futures contracts, right about the time Vice Chairman

The International Energy Agency, or IEA, is a 35-year-old quasi-political body headquartered in Paris, France. It was set up in 1974 in response to the budding energy crisis. The IEA’s main focus, as one might expect, is tracking the global oil market. Other energy markets are tracked and studied also.

Every year the IEA publishes its highly anticipated “World Energy Outlook,” or WEO, which runs hundreds of pages long. For the 2009 WEO, just recently released, the executive summary alone is 17 pages.

The weirdness came earlier this week when the U.K. Guardian, a British newspaper, accused the IEA of inflating oil reserves in its projected forecasts.

“The world is much closer to running out of oil than official estimates admit,” The Guardian reports, “according to a whistleblower

Before we get into today's topic, a quick comment on the state of the market here and now.

There is a bit of debate going round as to whether traders should be anticipating the demise of the epic 2009 market rally... washing their hands of the nutty action entirely... or jumping back in, jack-be-nimble style, to catch a piece of the last hurrah.

Different traders will come to different conclusions, of course. It takes all kinds to make a market. Just two quick observations and we'll move along.

First, there is a reason they call it "greater fool theory." And second, trends have life spans – just like people.

Trend mileage can vary widely, of course. But this is true of people too.

Field Reporter: Are they slow-moving, chief?

Sheriff McClelland: Yeah, they're dead. They're all messed up.

– Night of the Living Dead (1968)

In B-grade horror movie lore, Tokyo has to fend off attacks from rampaging monsters like Mothra and Godzilla. If the cinema were more true-to-life, however, Japan would be less worried about overgrown fire-breathing lizards... and more terrified of zombies instead.

In response to a recent Taipan Daily asking what brought us out of the Great Depression, a number of you responded with a good question. “What about Japan?” Or rather, “What about Japan’s extraordinary rate of consumer savings – and why hasn’t it helped?”

After putting in a massive blowoff top to cap a truly insane 1980s bull market, Japanese stocks proceeded to head lower... for the next twenty years. The Nikkei is now less than a quarter of its value at the 1990 peak

How to earn 367% off American Retail’s “Seven-Ten Split.”

“Biggest jump in wholesale food prices in more than a year!”
– Associated Press, commenting on the Labor Department’s latest wholesale prices report

I know that Justice and I have gone on for some length now on the recent rise in agricultural prices. And I now am about to delve into that same topic – again.

By now, you are probably wondering if you have accidentally subscribed to the Farm Report. But hey – it beats another column on car companies, eh?

(Oh wait, here’s an item on cars after all. I was just perusing Chrysler’s list of doomed dealerships. No wonder they are going under: In my area, there are some 25 or 30 outfits on the list that are all within an hour’s drive of each other. Many

On the one hand, certain areas of the market – the ones much favored in the big run-up – have started to wilt and fade as the much-lauded “green shoots” turn brown. On the other hand, areas of the market which didn’t participate as much in the rally at first have started showing signs of life.

Take the grain markets for example. Foodstuffs like corn, wheat, soybeans and sugar have been red-hot in recent days.

We can see this in the Powershares DB Agriculture Fund (DBA), which Macro Trader has been long for a number of weeks. (We took partial profits earlier this week, and continue to ride the

Gold and gold stocks have been hammered as of late. The yellow metal took a header on Monday, with the futures closing right on the 200-day exponential moving average. If that support doesn’t hold today (Tuesday), gold may even be trading lower by the time you read this.

So what’s going on exactly?

There are a few factors at work at here. To skip ahead a bit, there is still strong reason to believe gold stocks could be one of the best trades of the year – but in the short run, the environment for gold looks challenging.

The IMF Bogey

One old bogey that has come out of the woodwork is

Let the currency wars begin.
– Chris Turner, head of FX strategy, ING Financial Markets

Practically by definition, Switzerland is a “neutral” country. The Swiss have avoided war for centuries – ever since the Congress of Vienna re-established Swiss independence in 1815.

Neutrality has served the country well. Rich men and women of all stripes – from Russian oligarchs to four-star generals to industrial magnates – have long stashed their wealth in secret Swiss bank accounts, in full confidence their arrangements would be kept safe and discreet.

Bloomberg notes that banking secrecy has been enshrined in Swiss law for 75 years. Thanks to that commitment, plus a nearly 200-year track record of not choosing sides in conflict, Switzerland has long held the crown as “the world’s largest offshore tax haven” (per The Wall Street Journal).

But nothing lasts forever. And so in recent days, Switzerland has threatened to start

By way of background, a few commentators have laid out the bearish case for gold – but none have pounded the table as hard as a guy named Nick Guarino. (I have been made aware of this by correspondence from readers.)

Guarino, working out of Canada, is affiliated with something called the “Wall Street Underground.”

I don’t know Nick Guarino... I’ve never seen his work or read his stuff. But a handful of you have referenced him as the source of this “deflationary death watch” idea.

Here is the thrust of Guarino’s argument, excerpted from a text that is apparently being passed around:

Some of the dumbest loans ever – to the most unqualified borrowers ever – were made. Now we are suffering a tidal wave of loan defaults. Under our

Bigger Than Europe

Now, the potential collapse of Europe might be considered a pretty big deal, right? Of course it is.

But there is another flashpoint here... one that ties into the longer-term possibility of war. (Just keeps getting better and better, no?)

I speak here of Ukraine.

source: CIA World Fact Book

The most notable thing about Ukraine, from a geopolitical standpoint, is the long border it shares with Russia.

The political orientation of Ukraine is deeply important to Russia for the following reasons:

• As a “Russian satellite state,” Ukraine offers aid and comfort to the Kremlin. With Ukraine under the sphere of Russian influence, Russia enjoys an extension of power and a natural buffer between itself

Will Germany prove content to fiddle as Eastern Europe burns? The risk seems real.

Angela Merkel, Germany’s chancellor, knows her party will be facing a tough series of elections this fall. She also knows Deutschland is struggling... and writing a huge check to bail out a clutch of flailing non-German nations would be a deeply unpopular act.

So when Ferenc Gyurcsany, the prime minister of Hungary, proposed a lump-sum Eastern Europe bailout package to the tune of $241 billion, the EU’s richer members spat out their croissants.

In a moment of quiet political panic, Chancellor Merkel stalled. “Saying that the situation is the same for all Central and Eastern European states, I don’t see that,” she said.

Political Will (And Lack Thereof)

This lack of political

Warren Buffett’s new annual letter to shareholders is out. You can find it (and all letters previous) on the Berkshire Hathaway Web site.

I read it over the weekend (sitting at the poker table, of course). There were a number of nuggets and insights in Buffett’s letter worth commenting on. I’ll probably discuss those later in the week when I write to Safe Haven Investor readers... today, though, I want to focus on just one passage.

But first, some background.

A Financial Fortress

Berkshire Hathaway (BRK.A) (Buffett’s investment vehicle) is like a “Rock of Gibraltar” in the Oracle’s own words.

It is one of the most, if not the most, financially sound corporations in the world. Off the top of my head, the only

For individuals, gold remains the best insurance against future shocks and the best store of value.
– William Rees-Mogg, Times Online

There has been a lot of talk lately about the gold-to-oil and gold-to-silver ratios. This is understandable, as both ratios are further out of whack than they have been for a long time.

The gold-to-oil ratio, for one, is now at ten-year highs.

The gold-to-silver ratio is similarly extended, though not by nearly as much as gold-to-oil.

For gold-to-silver, the 200-month moving average is 57 and the current value (as of this writing) is a touch above 69 – meaning a single ounce of gold is worth 69 ounces of silver.

The 200-month simple moving average tells us that 57 is closer to