Bill Jencks

The Economy, And Why It's Taking So Long to Fix It

All these complex explanations...People seem to forget that economic problems and crises in different eras are all remarkably different. Currently we have a bad economic crisis - whose main unique characteristics are that it is a huge credit crisis which has gone massively global and currently - after a short period of inflation, we are now in a downward spiral and, possibly, in a liquidity trap. I say this because Bernanke has been pumping out the dollars with his printing press - trying to inflate the dollar - he's been doing this for some months now, but it isn't working. The M1, M2 and M3 money charts show this, and the CPI chart shows that inflation has stopped increasing, has turned and is moving vertically south right now. So despite plenty of money out there, the economy is in a rapid deflationary spiral at the moment - and Bernanke is furiously trying to inflate the dollar and is not succeeding - which could well mean that we are in a deflationary liquidity trap right now.

Currently Bernanke and the US govt. have tried tax cuts, buying up assets such as stocks, buying other currencies as well as printing mega-amounts of dollars in order to stimulate inflation. But this isn't working - institutions and US citizens are still not lending and hoarding cash. The velocity of money is at a standstill - there is no liquidity in the economy - so deflation is inevitable.

This is what has already happened and what will happen:

1. Inflation(already happened)
2. Deflation(happening now)
3. Hyperinflation(yet to happen)

Why Obama Should Terminate All Federal Reserve and Treasury Programs

So where is President Obama going to get the money for all these myriad of lending, purchase, funding facilities?

Out of thin air?

Again?

I'm guessing Mr Artman is an Investor of sorts.
He's certainly not an economist.

Will China Continue to Buy U.S. Debt?

Between 2002 and 2004, the dollar value went down by 24%. Between 2004 and 2006 the dollar value went down a further 12% - and between 2002 and now, dollar value has probably depreciated by 50%.

So - IN JUST 7 YEARS - dollar value has dropped a massive 50%.

So here we have the US government's desperate sell of US Treasuries to keep her debt and economy afloat, and then, on the other side we have China, Japan and other US Treasury purchasing countries wondering whether these longterm US Treasuries will be worth anything at all at maturation in 10, 20 or 30 years.

Who is the US Govt. trying to kid?

Sickness May Be the Cure for the U.S. Economy

Leave socialism and politics out of this !! This is about bad economics - economics is regarded as a pure science, politics is not a pure science, very dirty at best, so dragging politics into economics doesn't help. In fact politicians usually have no real depth of understanding in economics at all. You could count the number of wise economists in Congress and in The Senate - on your thumbs(..and that's in a good year).

To blame 'creeping socialism' is no solution to an economic problem. And it doesn't really matter whether your a Democrat or a Rebuplican - if politicians do not understand how to pay back there own country's debt, if the President of the US and the Fed are happy to try and inflate away the US Debt as well as tend its own feckless dollar with continuing "benign neglect" - well, come on - that's not socialism.

That's just complete economic stupidity.

How to Stimulate the Economy: Fire the Sell-Side Analysts

Quite a rant. But, lets face it - the market forecasts and warnings of Warren Buffet, Jim Rogers and Marc Faber are worth a listen. These are all people who see great market as well as economic problems for the US in the future. I tend to believe these gurus, since they have no reason to be Wall Street analyst clones.

And, of course, George Soros - at a recent dinner speech this week at the University of Columbia - said that this 'recession' would be as bad if not worse than The Great Depression.

George Soros also said that the bottom was nowhere in sight yet.

The Tiger Woods Economic Upturn

I doubt if the US economy and markets will see that many birdies or eagles within the next few years myself.

Bogeys yes, eagles no.

Will China Continue to Buy U.S. Debt?

China has already said that their purchase rate for US Treasuries will be reverting to pre-Bailout levels - ie will be muxh less than now. And with US Fiscal Debt continuing to skyrocket towards Mars, I would say this is a bad turn of events for America.

Add to this that China has been purchasing fairly large quantities of gold in the last several months(spot gold has gone up 20% since Oct 2008), and I think we might have an inkling in what direction China is headed with her "savings".

But I still read tracts of opinion like, "...Ah, but China must support the American Debt, otherwise she will lose her biggest market !!"

China is, at the moment, gearing up to her domestic market(which consists of 1.3 billion people, 4 times the population of the US) and at the same time will decouple from the dollar and switch her external markets to India, The Middle East and Europe(as a whole a far larger market than America) instead of the US.

The fact is without China, or some other idiot paying the US Debt, the dollar and the American Economy will collapse - and this is a fact. The US government has lost control of its own dollar internationally, causing a huge weakness in America's influence and the reason for this is simple.

The US government has either forgotten or simply refuses to look after its own huge fiscal debt. This is clearly apparent in US fiscal policy.

After all, why the hell should ANY country pay another country's debt for them?

Laughable.

Why AIG Had to Be Nationalized

There is a fairly simple reason why AIG had to be saved. China has bought billions of Treasuries from the US - and a large chunk of these were 'insured" and guaranteed by AIG using complex instruments like CDS etc. If AIG had fallen, China would have been hit by the nasty consequences. And since China is propping up America's debt, well I think you get the point.

That's why AIG really had to be saved.

Gold Correction Now More Likely than Not

Good article - but gold also has one big advantage - it is a valuable hard asset with no counterparty risk. I personally would not invest in any mining stocks and certainly no stocks that are dollar denominated at the moment(another major area where your profits can get trashed).

I would just buy gold online. The two best sites for this are probably The Perth Mint and GoldMoney(Google them) which is run by James Turk. Both allow you to buy gold bullion at low storage rates, and GoldMoney allows you to transfer your gold into USD, GBP, CHF or EUROS electronically and quickly. Here I'm not looking to make money, I just want to preserve the value of my capital.

Anyone who is investing in stocks now in the medium or longterm is being very foolish I think.

5 Indicators the Economy Is Recovering

Too detailed, alot of the reasons not related to economics. Here are another 5 economic reasons why the US Economy will not recover this year:

1. China has recently reduced its Treasuries purchases to pre-Bailout
rates - China now fully realizes that the more US Treasuries she buys, the less they will be worth at maturation - all due to Bernanke's massive 'quantitative easing' play - where he is trying to 'inflate away' US foreign debts. Trouble is, this also reduces the dollar value - this will hit mainstreet pockets hard. It is very likely that China will tail off her purchases of Treasuries in preference to purchasing more gold.

2. The dollar will fall as a result of the above and many other reasons.

3. China will soon be introducing the Yuan as the reserve currency of Asia. Russia will also be a party in this currency play. The dollar will be given the boot in Asia as the reserve currency. Another reason for the dollar to fall.

4. OPEC has been slashing the number of its refineries and reducing its oil reserves - to reduce supply - in order to drive up the price of oil. This will happen soon - and the dollar will trash, just like it did last time. This will prevent the US coming out of the recession anytime soon.

5. George Soros, this week said that the markets still haven't found bottom - there is no indication of this yet.

5 reasonably good reasons why the US economy will not come out of recession in 2009.

More Contrarian Chatter That a Rally Is Imminent

So, with the financial crisis at full crunch, with OPEC shutting down oil refineries like crazy and reducing its oil reserves continuously to soon drive up the oil price, with the Chinese about to introduce the Yuan as the new reserve currency of Asia giving the big boot to the dollar(didn't know about that one did you?), with expensive climate change adjustments, with the Treasury bubble at full stretch and China reducing its Treasury purchase rate to pre-Bailout levels and with Bernanke pumping out greenbacks like there's no tomorrow, the inevitable coming dollar plunge - well, what do you really think folks? These are all good economic reasons for the continuation of the market dirge, not Elliot Wave reasons.

Elliot Wave theory might have application with day traders, but in the long and medium term - I would seriously suggest that watching the economic ball will pay more dividends than matching squiggle patterns on a chart.

Real economics is simple. Economic cause and market effect. That's it.

Why Obama's Deficit-Spending Plan Will (Probably) Work

Huge deficit spending, tax-cuts, supply side economics have NEVER been proved to work on there own in any dire economic situations or models. These Keynesian methods are pie-in-the-sky, chosen very conveniently by polititians and not real economists to make themselves popular, to polish their own bent images. Harsher fiscal remedies are never allowed, since politicians continually pray for another dodgier way than heavily taxing there own people and businesses. This only prolongs the economic agony.

Try Googling "Kotlikoff and Menu of Pain" to see a realistic remedy for America's huge Fiscal Deficit.

What Will We Do with All That Debt?

At last someone says it. With all these investment experts scratching their heads and saying, "Where has market confidence gone??", this is a very easy one.

Since investment in countries is usually judged on things like GDP, Debt, borrowing levels etc - who would really be stupid enough to invest in any American or dollar denominated stocks now ? With a National Debt of $12 trillion and a total Fiscal Debt of $65 trillion(and still rocketing skywards towards Mars), I'm really not surprised that 'Market Confidence' is hiding out somewhere in a cave.

And Motley Fool is still sending me alerts like "Hey, don't miss this MegaTrend stock buy...Now's the time to buy folks !!!"

I really don't think so. If and when I do invest - Asian stocks will be the best. And certainly not in dollar stocks. At least China has low debt, its population actuallyb saves and they manufacture alot of goods. America doesn't do this because she can't compete pricewise.

And it will not look any better for the US until 'market confidence' actually sees the US govt paying back its massive debt.

And Obama is still spending. . . .there is nothing in his new policies about addressing these debts. It's all spend,spend,spend - just like Bush Jnr.

I'm guessing with these policies, market confidence is not about to change....

Gold: Now Demonstrating Trust in Obama

The US is certainly trying to inflate away its massive debt. Unfortunately China has now spotted this ploy and is reducing it's Treasury buying rate to pre-Bailout Levels. Well done Bernanke !!

Meanwhile Pres. Obama seems to be throwing more truck loads of dollars at the financial problems, the same as Bush, except more. Wow, what a solid, original strategy.....And everyone wonders why 'market confidence' hasn't returned yet?

And then there is this teensy problem of the $65 trillion US Fiscal Debt which is still rocketing skywards towards Mars - I guess this is what's called laissez-faire economics, right?

And I'm thinking, perhaps this is why 'market confidence' is still shaking it's head vigorously and laughing its socks off....

In Defense of Tim Geithner

You're right to be careful in your assessment of Geithner. At the moment, regarding China, he is posturing with a verbal big stick, but this is no more than a photo-call because he's bluffing.

Now ask yourself "What is the ONE economic event that would bring the dollar down?"

Hold that thought.

Now read an article I wrote today called "China's Torpedo Play: Yuan Set to Replace Dollar in Asia" - read it here:

slowsmile.hypocrisy.co.../

If I know what's coming, then Geithner certainly knows.

That's why he's bluffing for the sake of the markets.
Won't work.