| The term red pill and its opposite, blue pill, are pop culture terms that have become a common symbol for the choice between the blissful ignorance of illusion (blue) and embracing the sometimes painful truth of reality (red). |
| Take The Journey |
|
|
- Currencies Try to Rebound Today
- Superior Biotechnology Leads to Superior Drugs
- The Delusion of Regulating Risk
- Talk of a Greek Exit Gets Louder
- Doug Casey on Taxes and Freedom, Part II
- Is Facebook the Rusty Hinge of the Stock Market?
- Fitch Downgrades Japan
- Doug Casey on Taxes and Freedom
- Greeks Run on Banks as Euro-Confidence Wanes
Will America Ever Recover From The Housing Crisis – A Real Estate Infographic
Back in March, on the back of the last gasp of yet another central bank-induced sugar high (in this case mostly LTRO 1+2), as well as economic data skewed by record warmth, a plethora of housing bottom callers (we would call them analysts but they are anything but) emerged from their hibernation and did what they do like clockwork every year: called a housing in bottom. Sadly, now that the market has topped out, at least for the current easing iteration, it appears that the housing triple dip as measured by Case Shiller will shortly be a quadruple dip. And so on, and so on, until the question becomes: will America ever recover from the housing crisis. We don’t know, but we do know one thing – fixing an excess debt problem with more debt won’t work. Period. Yet that is what continues to be the only “policy” in resolving the aftermath of the Great Financial Crisis. For everyone else seeking a more nuanced answer we suggest perusing the infographic below which provides a less jaded perspective and even has a Hollywood conclusion: “The end is on the horizon”… well, a Tarantino-esque conclusion: “…The distant horizon.”
continue, to see infographic
Icelandic Anger Brings Debt Forgiveness in Best Recovery Story
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
Continue reading
Not So Fast On That Whole Economic Recovery Thing
Not so fast. Those that are publicly declaring that an economic recovery has arrived are ignoring a whole host of numbers that indicate that the U.S. economy is in absolutely horrendous shape. The truth is that the health of an economy should not be measured by how well the stock market is doing. Rather, the truth health of an economy should be evaluated by looking at numbers for things like jobs, housing, poverty and debt. Some of the latest economic statistics indicate that unemployment is getting a little bit worse, that the housing market continues to deteriorate, that poverty in America continues to soar and that our debt problem is worse than ever. If we were truly experiencing the kind of economic recovery that the United States has experienced after every other post-World War II recession we would see a sharp improvement across the board in most of our economic statistics. But that simply is not happening. Sadly, this is about as much of an “economic recovery” as we are going to get because soon the economy will be getting much worse. So enjoy this period of relative stability while you can.
The Obama administration would have us believe that unemployment in the United States has declined, but the truth is that the percentage of working age Americans that are employed has stayed very, very flat for more than two years and now there are some measures of unemployment that are actually getting worse.
For example, according to Gallup the unemployment rate in the United States has risen from 8.5% in December to 8.6% in January to 9.1% in February. The Obama administration would have us believe that it is actually going the other direction.
Initial unemployment claims are rising again. For the week ending March 3rd, they increased by 8,000 over the previous week to 362,000. This is not the kind of good news that people were hoping for.
What the U.S. economy could really use are millions of good jobs. But those are being shipped out of the country at a staggering pace.
Right now there are millions of Americans in their prime working years that are sitting at home wondering what to do with their lives. The average duration of unemployment in the United States continues to hover near a record high, and if we were truly experiencing an economic recovery it should have been falling by now.
Today’s Reckless Spenders Enslave Future Generations
Bleak Future: A fresh report says the new federal debt ceiling of $16.4 trillion will likely be reached just after Election Day. Those driving it up will be relatively unaffected. They’ll just deliver the bill to our children.
The Bipartisan Policy Center has set the next DC-Day for late November, after just a few weeks earlier saying it would hit in the spring of 2013. Pundits will no doubt wonder how the earlier date will affect the election.
And for good reason: Yet another debate over raising the debt ceiling will swing some voters.
But largely lost in the endless analyses, high-speed spin and roaring rhetoric is one fact that reflects poorly on today’s political class: The debt burden will fall hardest on those who have no vote and no say in this country’s public policy.
Liable for the biggest chunk of the debt are children being born today. According to the Senate Budget Committee, each member of this group, which employs no lobbyists, already owes $1.53 million in federal debt.
Those with the next highest burden — today’s high school students — will owe only about half that of today’s babies: about $870,000. College students are third, inheriting $681,000 in debt.
Those who ran up the indebtedness get off lightly. Baby Boomers are on hook for only $157,000 each.
These are, of course, averages among age groups.
More specific totals depend on birth date. President Obama, for example, in a mere three years has run up more debt than all the presidents from Washington to Clinton combined. He’ll be responsible for only $208,301, according to a debt calculator created by the GOP staff on the Senate Budget Committee.
Waist Deep in the Big Muddy
With its announcement this week that it will keep interest rates near zero until at least late 2014, the Federal Reserve has put another large crack into the foundations underlying the US dollar. In a misguided attempt to provide clarity and transparency, Ben Bernanke has instead laid out a simple road map for economists and investors to follow. The signposts are easily understood: the Fed will stop at nothing in pursuing its goals of creating phantom GDP growth, holding down unemployment, propping up stock and housing prices, and monetizing government debt. To do so, it will continue to pursue a policy of negative interest rates, while ignoring the collateral damage of unsustainable debt, virulent inflation, misallocated resources and credit, suffering yield-dependent retirees, and a devalued U.S. currency.
Not surprisingly, precious metals and foreign currencies rallied strongly on the news – with gold up more than 4.3% and the Dollar Index down nearly 1.6% in the days following the announcement. The Dollar Index is now down more than 3.5% from its highs in mid-January.
In coming to the momentous decision to extend the Fed’s prior low-rate promises by another 18 months, Bernanke and his cohorts relied on a somber view of the economy that is at odds with the sunnier view presented the night before by President Obama in his State of the Union address. To justify holding rates so low for so long, the Fed is choosing to ignore the fact that CPI inflation is currently running north of 3%. Instead, it has conveniently chosen to look at a hand-picked alternative measure, the chain-weighted core PCE, which comes in just a shade below the Fed’s arbitrary 2% target. How convenient.
After some changes in key membership at the Federal Reserve’s policy-setting Open Markets Committee, in which a few long-time hawks were put out to pasture, the Fed has now established itself at the extreme dovish end of the policy spectrum. Among other central banks around the world, it may now be outflanked only by some very profligate ones in South America and sub-Saharan Africa. Unfortunately, the FOMC has its hands on the wheel of the world’s reserve currency, and therefore its decisions may lead the planet into financial chaos as long as other nations are content to follow the Fed farther and farther into a swamp of liquidity. To paraphrase Pete Seeger’s protest of the escalation of the war in Vietnam, “we are waist deep in the Big Muddy and the damn fool yells ‘press on.’”
Fed officials push more stimulus for housing
Two top Federal Reserve officials on Friday pushed the case for more stimulus from the U.S. central bank to help the economic recovery, each zeroing in on the country’s weak housing market.
Policymakers need to consider more action to kick-start the housing sector and help the country’s “frustratingly slow” economic recovery and “unacceptably high” unemployment, William Dudley, president of the New York Federal Reserve Bank, said in a speech in New Jersey.
Monetary policy should work to complement actions by other U.S. government policymakers, which together could help to stabilize home prices and turn around the housing market within a year or two under good conditions, said Dudley.
Speaking in Hartford, Connecticut, the president of the Boston Fed, Eric Rosengren, said one way to shore up housing would be for the central bank to buy more mortgage-backed securities.
“Given the low inflation rate and weak labor markets that are both likely to persist this year, I believe the Federal Reserve should continue to explore ways to promote more rapid recovery through stronger growth,” Rosengren told a business group.
The speeches from Dudley and Rosengren, both of whom are considered part of the Fed’s “dovish” wing — more concerned with strengthening… Continue reading
