Plan B Economics

Preview of the U.S.'s Future: Debt Burdened Nation?

Plus the US is dependant on foreign creditors. Japan could internally finance its debt.

Foreign creditors means the US is more likely to print its way out.

www.planbeconomics.com.../


On Nov 23 06:39 AM damienhaas wrote:

> There is one big difference, Japan have Huge surplus when their Real
> Estate Bubble burst and they can last 20 years. US have massive deficits.
> The only way is to print money out of the problem and stealth inflation
> will be come first before the eventual implosion. That will not take
> 20 years.

Rising Gold, Flat Dollar Indicate Spread of Inflation Threat

Plus global demand for gold is rising (i.e. it's not just a monetary phenomenon). Central bank of Mauritias recently bought 2 tons. India bought 200 tons.

The US debt problem is scaring foreign Treasury investors. Why buy USTs from a country with a depreciating currency and a growing debt problem?

planbeconomics.com.../

The Dow at 4000? Don't Laugh, It Could Easily Happen

>>>"Falling asleep at the wheel: Investors have a short memory, in 1995, the DJIA was around 4000. Today our economy, could be argued is actually weaker than it was back then. Our real estate is in the tank, we have double digit employment, and our manufacturing has all but dried up. Add on to that the dire consequences of a potential commercial real estate meltdown and you have the recipe for another financial crisis."<<<

Real GDP in 1995 was about $8 trillion. Today its around $14 trillion. By saying the economy is worse of than in 1995, are you proposing our economy will shrink by about 42%?

The Fiscal Prudence Debate

Unlike the US, Japan had lots of domestic savings and could fund its debt internally.

U.S. Government's Size: The Slow-Motion Crisis

Big government means big debt, which crowds out private capital. Interest rates go up. Productivity goes down.

Eventually the government gets too top-heavy to stand on its own two feet. Under the burden of debt-financed expenditures it collapses.

We've been through this before. www.planbeconomics.com.../

Why U.S. GDP Will Decline in Q4

If one were to calculate GDP growth for Q3 the way people would intuitively do it (i.e. Q3 2009/Q3 2008) the economy actually shrank about 2.2%.

www.planbeconomics.com.../

Natural Gas: Ride U-Turn Up

Although inventories are growing, it appears that North American nat gas production is declining significantly. Not sure if this is due to shut-ins or depletion...

www.planbeconomics.com.../

25 Reasons We Will Not Have a Depression

The US economic empire was supposed to decline several times before...1970s stagflation, 1950s-1990s rise of Russia, 1980s Japan taking over the world, WWII, Vietnam war, rising commodity prices...

Can UNL Tackle the Natural Gas Contango That's Plagued UNG?

Interesting...now people can play the roll when the market is in contango...even if spot goes nowhere.

That said, Nat Gas production in North America is apparently on a serious decline...

www.planbeconomics.com.../

Bill Gross: Anything But 0.01%

Put in waffles. Tasty, tasty waffles.

Or gold...ok maybe 90% allocated to gold and 10% to a diversified portfolio of waffles.

A Look at George Soros's Recent Trades

Verizon and AT&T...sounds like a sector play? Or a consolidation play?

Chance of a Depression Now 5 Percent

If the Fed stops buying mortgages (they have said they will stop in March 2010) we will go into a depression. MBS purchases is the 'plug' that stopped the entire economy from washing down the drain.

The knock-on effects of deteriorating house prices were sending the US economy into depression until the Fed stepped in (Jan 09). The financial system and consumer would have been utterly destroyed if it weren't for printed money propping up MBS (keeping rates low). This has attracted buyers into the market.

Take away that 'plug' and what was happening late 2008/early 2009 could easily pick up where it left off.

Essentially, the MBS plug needs to stay until house prices reach some sort of equilibrium. Obviously not via falling house prices because the plug prevents that...but by rising asset prices and incomes...nominal or real.

planbeconomics.com.../

Has the Dollar Been Debauched? (Hint: Check Out the DJIA Priced in Gold)

On the same note...here's the S&P 500 priced in gold: www.planbeconomics.com.../

Basically shows that the 2003-2007 'bull market' was simply a form of inflation.

Will a Gold Correction Come?

If China really is advising its citizens to buy gold, there could be a lot of support. 1 billion gold buyers...

Here's an interesting explanation of why China is doing this:
www.planbeconomics.com.../

Meredith Whitney Hasn't Been This Bearish in a Year

Great points.


On Nov 17 11:01 AM DonFurio wrote:

> Anyone that has followed the markets closely the last few years will
> know that she was never really bullish until very late into the rally.
> She only said "cover your shorts until the stress tests are over
> and then put your shorts back on". I remember watching that interview
> and she wasn't bullish. She was never bullish on BofA, she only said
> that it will probably not need to be nationalized, and Maria made
> it look on that interview that she was super bullish when BAC hit
> 3.50, she was not. She waited until well into the summer to upgrade
> some of the financials.
>
> Will everything go straight up from here, probably not. I like to
> invest a minimum amount each month and add more if I see fit. I
> won't be adding as heavily as I did from Jan-Aug this year, but so
> what, still some opportunities out there.