Harry Browne, the former Libertarian Party candidate for president, used to say: “the government is great at breaking your leg, handing you a crutch, and saying ‘You see, without me you couldn’t walk.’” That maxim is clearly illustrated by the financial industry regulatory reforms proposed this week by the Obama Administration. FULL ARTICLE
“Crony capitalism” is a term often applied to foreign nations where government interference circumvents market forces. The practice is widely associated with tin-pot dictators and second-rate economies. In such a system, support for the ruling regime is the best and only path to economic success. Who you know supersedes what you know, and favoritism trumps the rule of law. Unfortunately, this week’s events demonstrate that the phrase now more aptly describes our own country. FULL ARTICLE
Not only must our leaders convince holders of our debt not to sell what they already own, but to back up the truck and buy a whole lot more. The hope is that a dream team consisting of a charismatic politician, a skilled Wall Street banker with longstanding ties to China, and a respected Fed Chairman, can close the deal. However, no matter how slick the sales pitch, no amount of lipstick can dress up this pig. FULL ARTICLE
General Motors is but a microcosm of what most ails the U.S. economy. For decades, GM rested on its laurels. Its management yielded to innumerable, exorbitant trade union demands, passing the costs on to consumers in the form of lower quality products. The result was that higher quality foreign cars, eventually also produced domestically by American workers, severely eroded GM’s once dominant market position. The company’s autonomy was effectively extinguished by the growing debt needed to finance this downward spiral. Investors, believing that GM was “too big to fail,” continued to accept the company’s high-risk paper. FULL ARTICLE
A dramatic lowering of interest rates and massive government spending cannot improve the bottom line of the economy (the individual’s ability to produce more and better-quality goods). Such policies can only redistribute real wealth from wealth producers to wealth consumers. FULL ARTICLE
This past Thursday, BankUnited FSB became the nation’s 34th bank to fail this year. Bank failures are nothing new, but this one will cost the FDIC $4.9 Billion per the FDIC press release issued Thursday, May 21. BankUnited had assets of $12.8 Billion and deposits of $8.6 Billion.
The takeover group is led by the infamous Carlyle and Blackstone investment groups. The take-away for the average Joe Public – is this:
The FDIC started 2008 with $53 Billion in its insurance fund, and this number is now less than $11 Billion. This translates to mean that less than a quarter of every $100 you have in a bank account is now FDIC “insured.”
It does not take a genius to predict that the FDIC insurance fund will be depleted this year, and a public bank closing (or “bank holiday” – as if it were some sort of twisted vacation) is likely this year. (Photo courtesy Luc Viator)
As a reminder, the press often compares the Obama administration to FDR. FDR closed the nation’s banks in 1933 when he also outlawed gold. Immediately afterwards, the dollar was devalued by 67%.
Speaking of gold, the gold price shot up to $950/oz after reaching a minimum of $865/oz in mid-April. Holders of gold will win the Gold War that is currently playing out in the world’s smallest major market of roughly $25 Trillion in 2008. Please try these recent articles I wrote:
America is more than a country; it is the ideal of liberty. In economic terms, liberty translates into the entrepreneurial spirit of hard work, risk taking and self-reliance. And this spirit has made America rich beyond compare.
Unfortunately, over the past four decades, much has been undone.
Under the guise of a new, “social” justice, political leaders have turned our native ethics upside down. Profit-taking is now seen as gouging; success is greed; businessmen are predators. This creeping socialist transformation of our culture has finally broken the back of the American economy. FULL ARTICLE
When, during the invasion of Iraq, the United States Government issued its famous deck of playing cards with the 52 arch villains of the Iraqi police state, Saddam Hussein’s face adorned the Ace of Spades. If the Obama Administration wanted to engage in a similar public relations campaign for the real estate crisis, the top card should be reserved for Alan Greenspan. FULL ARTICLE
It’s all part of the war on depression, which is destined to be as successful as the war on drugs. But, hey, if it is a good investment, why not buy bailout bonds? Well, there’s a problem. The bonds represent credit extended to companies and projects that are proven market failures. Creating these bonds is a way of institutionalizing the principle of buying low and selling lower. FULL ARTICLE
The FDIC started 2008 with $53 Billion in its insurance fund, and this number is now less than $11 Billion. This translates to mean that 