huskerbob

Saudi Arabia emphatically denies reports Gulf Arab states are in secret talks to replace the U.S. dollar in oil trading. Britain's Independent quoted unidentified sources as saying Gulf Arab states were in secret talks with Russia, China, Japan and France to turf the dollar.

Surely the semites are telling the truth. Who wouldn't want a rock solid, well managed currency like the dollar, which is backed by the full faith and credit of the USA? Guess this move is less awkward since our troops are no longer stationed there.
Let's other countries keep devaluing their currencies as fast as the dollar, or we'll be paying european prices for gas in the future.

Is Marc Faber Right About the U.S. Dollar?

The answer is easy. The Fed has destroyed 96% of the dollar's value. Why would they change their policy now? Their stated goal is to destroy 2% of the dollar's remaining value every year.
Unfortunately, dollar destruction will accelerate to the point where it becomes a regular topic of conversation among the hoi polloi.
Will the world continue to send us their savings?
Will the ruling class do what needs to be done to strengthen the dollar?
No and no, emphatically. The dollar will continue to slide in the coming years, with an occasional gain here and there.

Social Security: Here's How to Extend the Fund's Life

Where is your article detailing how we could have kept Madoff's fund going? Didn't those investors, including charities, put in their hard-earned money expecting a comfortable retirement or at least some rewards? At least Madoff made some little effort at producing value (enough to fool the SEC anyway). "Investors" in social security are no more deserving of payouts than Madoff's suckers. Theirs was not a pure ponzi scheme like social security, simply taking money from late investors to pay the early ones. In spite of whatever painful and unfair schemes you can think up, all ponzi schemes end the same way. That's why our appointed rulers do not participate. Social Security is for suckers, and it will end in disaster (see the Supreme Court decision Flemming v. Nestor)

In a mammoth piece for NY Times Magazine, Paul Krugman wonders how economists got it so wrong.

Hmmm..., I didn't read any mention of Austrian economics in the entire article. Can someone really be a valid scholar while completely ignoring an opposing school of thought which, especially recently, seems to have a lot of valid ideas (as well as success in predicting our current predicament)? Krugman and his diehard Keynesian cohorts come across as economic lysenkoists. They refuse to be discredited by the fact of their failure! To paraphrase the old Communist saw, "Keynesianism is the perfect system, it's just that no one is doing it right".

The Curious Problem of Gold and Silver Coins as Legal U.S. Tender

Even though the original case was interesting and highly unusual, and the incredible result was 0 convictions on 160 charges, dealing with a $114 million enterprise, news of the case was carried by exactly 1 newspaper (the local paper) in the entire United States! Complete blackout by all other major news entities.

Paul Krugman says California's collapse has him rattled, and wonders if America will follow it into ungovernability. "Who would have thought that America’s largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?"

California is the number four oil producing state (right behind Alaska) and number 12 in natural gas.
The problem is not lack of resources, it's idiotic, out of control spending to buy votes. Work for CA and retire on 80% of your highest salary!
Paul Krugman is a statist Keynesian who will always advocate more government confiscation of wealth, more government control. Reduce government spending? Who ever heard of such an idea?
How did such a tool win the Nobel prize for economics? It's handed out by a central bank. What a surprise.

Panel discussion on whether we really need a U.S. auto industry: Robert Reich, Robert Lawrence, Tyler Cowen, Mark Thoma, Deborah Swenson.

Isreal seems to do just fine without a massive domestic auto industry, and their neighbors are a more immediate threat than ours.
"We of couse need domestically made vehicles... in case of war."
What war are we talking about? Are Chrysler and Chevy a huge help in Afghanistan and Iraq? Can anyone imagine a scenario where we need to mobilize the economy to fight a war?
We can't fight a country with nukes or biological weapons or any of their allies unless we are not going to worry about having wmd's used against us. The remaining countries are so weak and isolated that it would not require us to mobilize our entire economy when we find an excuse to invade.

Real Estate: Rentals and Sales Prices Out of Sync

Evergreen, you have a good point that the federal numbers provided do not reflect the significant drop in home prices we have experienced.
However, you can use the more accurate Case Schiller index and still see significant downside. Don't forget that rents are falling in many markets. We are not likely to see rents rise significantly unless income rises as well.

Real Estate: Rentals and Sales Prices Out of Sync

Not a chart to make a realtor happy. The SF Federal Reserve looked at this divergence in 04 and assumed the lines would continue on their seperate and merry ways. They also assumed any correction to this price distortion would come from "slower house price appreciation". Maybe today they would change that to "faster house price depreciation". The NY Fed refused to see any evidence of a house price bubble in this same chart.
There is a compelling reason for the indices to move back into sync, as home prices and rent were affected by largely the same factors and will be again now that it takes more than a social security # to get a mortgage. I was going to write pulse instead of SS# but that probably wasn't required on all loans.

Will Deficit Stimulus Spending Help or Hurt Economic Recovery?

jpiretti - apologies. It just drives me nuts when people argue for the need for a massive military when it is suicide to fight anyone but weak and friendless nations. That money could better serve our nation spent elsewhere.

Will Deficit Stimulus Spending Help or Hurt Economic Recovery?

Jpretti: you seem to be unaware that we will never be on "full war footing". Our wars are limited to the group of nations which do not posses nuclear or biological weapons and have no allies which are so equipped. Can you name a single such nation which would require us to go to full war footing? I know you probably think it's fun to bomb nations that can't fight back, but there are other countries with nukes now.
We could go to war with China or Russia or their allies, but ask them first to please not deploy WMD's if they are losing.

After a series of high-profile failings, the SEC is creating a team of specialists to focus on fighting fraud. The idea is a major shift for the SEC, which traditionally has relied on enforcement personnel who were generalists.

The SEC is going to fight fraud? This IS news! A common refrain of people who have been ringing alarm bells on suspected ponzi schemes is that their warnings are ignored by the SEC.
As a hilarious aside, here is a quote from the investigator who gave the all-clear to Madoff in 2006: "If someone provides you with the wrong set of books, I don't know how you find the real books." She is shocked that a criminal would give her phony accounting to look at! No fraud will be uncovered unless the company provides the investigator with the documentation of their fraudulent activities!
She "was shocked" to learn of the $50 billion fraud. You can't make this stuff up!

Defined Benefit Pension Plans May Be Financial Crisis' Next Shoe to Drop

Add in unreported/underreported losses at funds holding pension money, ponzi schemes and criminals like WG Trading who attracted pension money, and things are getting worse just in time for the baby boomers to start collecting their retirement.
I wonder how long until the pension bailout. Maybe they will just juice social security payments. Can't help but think that as long as they are printing dollars, they won't just print a few billions more to buy the boomer vote. Worked for FDR!

Ponzi Schemes: FBI Arrests Danny Pang

Buying gold? I guess he was worried about inflation:)

TARP Watch: Riskier, Less Transparent and More Corrupt

So what member of our government is to be held responsible? Looking back through the long history of government blundering, the answer will be: no one.
Whatever. I doubt Treasury's negotiations with GS were too stressful.