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Results 451–485
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Government Policies Pushing Towards Depression
by John Browne of Euro Pacific Capital,
As leaders around the world look to tighten the reins on out of control spending, President Obama and his Democratic supporters in Congress believe that their stimulus actions have succeeded and should be redoubled. Armed with nothing more than faith in government and a belief that spending is both a means and an end, it appears that the U.S. stimulus policy will continue. The net result of these efforts will not be a more vibrant economy, but the perpetuation of fear and confusion in the business community and the continuing expansion of deficits that will lead inevitably to higher taxes.
In the Shadow of the Dragon
by John Downs of Euro Pacific Capital,
For investors, the Chinese push into frontier markets may offer promising returns in the medium-term. For example, emerging market bonds have rallied every quarter since the end of 2008, and posted record inflows this year. Unfortunately, accessing frontier markets has historically been difficult for small investors. Poor accounting practices, corruption, lack of local knowledge, and illiquidity are risks to be considered. For the right investor, though, there are increasing opportunities to invest in these markets via enterprising Chinese firms.
The New Ideological Divide
by Peter Schiff of Euro Pacific Capital,
Despite the apparent deficit-cutting solidarity that emerged from this weekend?s G-20 meeting in Toronto, it is clear that the great powers of the industrialized world have not been this philosophically estranged since the end of the Cold War. Ironically, in this new contest, the former belligerents have switched sides ? the capitalists are now the socialists, and vice versa.
Stalemate in Toronto
by John Browne of Euro Pacific Capital,
The G20 summit was an attempt to ignore the out-of-control spending contained in Western governments' budgets and instead unite behind a banner that they called "financial responsibility." This is akin to a group of Mafiosi holding a summit on business ethics. President Obama had three goals going into the summit; none were achieved.
Suiting Up For a Post-Dollar World
by John Browne of Euro Pacific Capital,
The U.S. has always benefited from its reserve-currency status, which allows it to accumulate unsustainable debts for an unusually long period without the immediate repercussions of inflation or higher borrowing costs. This false sense of security, however, may be setting us up for a truly monumental crash. After two decades as net sellers of gold, foreign central banks have now become net buyers. What's more, more than half of central bank officials surveyed by UBS didn't think the dollar would be the world's reserve in 2035.
Chinese Workers Force the Issue
Chinese factory workers and other laborers across the country are going on strike, thus defying the orders of their government-run unions and risking dismissal by their employers. The Chinese government must find a way to nip their labor issues in the bud. The best policy approach would involve yuan revaluation. By reducing the rate of inflation of the Chinese yuan, the purchasing power of the yuan will increase, thereby allowing Chinese workers to better enjoy the fruits of their labor. As living standards rise, worker unrest will subside, and the impetus to strike will vanish.
The Phantom Recovery
by Peter Schiff of Euro Pacific Capital,
Once the euro finally stabilizes against the dollar, commodity prices should resume their rise, especially oil. Normally, the uncertainty created by the disastrous oil spill in the gulf and the resulting moratorium on deep-water drilling would have sent crude oil prices skyrocketing. However, fears of a global slowdown, euro weakness, and general risk aversion have held prices in check. As Asia continues its growth and Europe regains its footing, there should be a delayed surge in oil prices, which will put yet another obstacle on the road to US recovery.
Key Indicators of a New Depression
During the Great Depression, the U.S. was on the gold standard like everyone else, which forced the country to live within its means. Unfortunately, because of the responses of the Obama Administration and the Federal Reserve, this recession could develop into something far more devastating than its predecessor: a hyperinflationary depression. As bad as the current downturn has been, inflation would make it immeasurably worse. It would require an honest accounting of the problems we face today to avert the disaster we see coming tomorrow.
Uncertainty Reigns Supreme
by John Browne of Euro Pacific Capital,
Five factors contribute to uncertainty in the market: doubt as to whether the euro will survive, "lurching socialism" in western economies, increased lending between banks and lack of credit for companies, fear that the finance industry is being targeted by politicians, and measures by Germany - such as banning naked short-selling - in reaction to the euro crisis. Those five factors are driving increased volatility.
Is Sovereign Debt Crisis Contained to Subprime?
by Peter Schiff of Euro Pacific Capital,
When mortgage-backed securities started to go bad, it wasn't as if the problems emanated in subprime and subsequently 'contaminated' the rest of the market. All borrowers were infected with the same disease, but the symptoms merely expressed themselves sooner in subprime. The same is true on a national level, whereby Greece plays the part of the subprime borrower. Even though the U.S. is considered to be the highest order of 'prime' borrower, our debt-to-GDP levels are at crisis levels compared to historic precedents, and are not that much lower than those of Portugal or Spain.
Reconnecting Wall Street to Main Street
What Wall Street calls 'liquidity,' Main Street calls 'inflation.' The only way to avoid the collapse of both Wall Street and Main Street is to 'reconnect' them through a new gold standard. Returning to the gold standard may involve a painful recession, as excesses are wrung out of the U.S. economy. It could be a long and difficult process. But only by restricting Wall Street's liquidity - Main Street's inflation - can we begin to restore the foundation that made the United States the greatest industrial power in the world.
Reports of Our Recovery Are Greatly Exaggerated
by John Browne of Euro Pacific Capital,
From all outward appearances, it seems that a grim chapter in U.S. economic history has come to an end. The economic position of the United States and the member states of the European Union, excluding Germany, however, is not as healthy as our media and politicians would have us believe. The danger is even greater when measured against the relative security and economic success of China, India, Brazil, Australia, Canada and New Zealand. In these countries, economic growth and financial responsibility are real. At home, the reports of our recovery are greatly exaggerated.
To Peg or Not to Peg?
by Peter Schiff of Euro Pacific Capital,
Just as it is always better to be rich than to be poor, it is always better to have a strong currency than a weak one. The effect of current Chinese currency policy is to make the U.S. dollar more valuable and the yuan less valuable. Whenever the Chinese government decides to end the peg, the Chinese economy will benefit as a result. While as citizens we can hope that U.S. leaders respond with the right policies to enable our economy to regain its former glory, as investors we should position ourselves to benefit from the more certain outcome.
Europe Fiddles, Gold Sizzles
by Peter Schiff of Euro Pacific Capital,
Much to the relief of jittery global markets, Greece's chronic debt problem has been papered over in a burst of European solidarity and apparent magnanimity. This act of mercy, however, may cost Germany its key position of financial dominance over the European Central Bank, which, in turn, could be detrimental to the long-term health of the euro. And so even though the euro stiffened once the immediate default fears abated, the price of gold was pushed to a new all-time high in euro terms, and a five-month high in dollar terms.
Krugman Strikes Again
by Peter Schiff of Euro Pacific Capital,
Like most of his academic peers, New York Times columnist Paul Krugman believes that falling prices are the economic equivalent of kryptonite, guaranteed to bring low even the mightiest economy. He is wrong. We need deflation. As a result of a phony boom in assets, prices levels are still too high relative to the earning power and productivity of American workers. Falling prices will cushion the blow of recession by allowing people to buy more with their paychecks and savings, and will eventually encourage people to spend when prices fall low enough.
Mr. Hu, Tear Down This Wall!
by John Browne of Euro Pacific Capital,
Over the last few decades, China has built a 'Great Firewall' to keep socially disruptive web content from reaching its citizens. American companies have long acquiesced to this censorship charade in order to have access to China's booming online market. Last week, however, Google changed its mind, shut down its regulated site on the mainland, and redirected users to its uncensored Hong Kong portal. This laudable act of defiance indicates that China's bustling marketplace is straining under its authoritarian political regime. Euro Pacific Capital expects the regime to yield.
The Fed's Last Hurrah
by Peter Schiff of Euro Pacific Capital,
When the tech bubble burst, the Fed inflated a larger one in real estate. Now that the real estate bubble has burst, the Fed is inflating the biggest bubble of all - a bubble in government. The government bubble will cripple the economy and deliver widespread misery to the majority of Americans. As government grows, it deprives the private sector of the resources it needs to survive and grow. In the end, when runaway inflation and skyrocketing interest rates burst the government bubble, there will be no more bubbles to replace it ? just one hell of a hangover.
Bull Market or Just Bull?
by John Browne of Euro Pacific Capital,
As the markets have rebounded from the brink of disaster, many Wall Street cheerleaders have proclaimed the dawning of a major new bull market. If we measure market cycles biannually, and if bull markets need not eclipse peaks achieved in previous cycles, then this forecast is spot on. The political, economic and financial fundamentals of our new big government era, however, do not support a sunny long-term outlook for U.S. stocks, and may even presage a second financial crisis.
Paul Krugman Versus Reality
by Peter Schiff of Euro Pacific Capital,
Paul Krugman is right about one thing - China's currency peg is destabilizing the world economy and it must end. If China reversed its role in the U.S. Treasury market, however, China would emerge as the long-term winner. The value of the Chinese currency would rise sharply, causing prices to tumble in China. Americans, meanwhile, would lose the ability to buy cheap goods overseas. The U.S. must formulate a plan that weans the country off its dependence on Chinese Treasury bond purchases without forcing change too quickly.
Dollar Bulls Beware
by Peter Schiff of Euro Pacific Capital,
The market is perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine that people will keep buying them once political and monetary stability returns to Europe. Indeed, the euro has recently stabilized. Once the dollar breaks decisively below last year's lows, many traders who jumped ship in the recent rally will look to reestablish their positions, and this will bring attention back to the financial disaster unfolding in the U.S.
Unlocking the Jobs Dilemma
by John Browne of Euro Pacific Capital,
Politicians in the U.S. and Western Europe have placed productive, private-sector jobs - the lifeblood of a sound economy - under assault. Most American job losses in recent decades resulted from outsourcing to more competitive economies because of the harmful effects of domestic government policies. Big spending will not resolve this deleterious situation. The only realistic solution is to unlock the power of the entrepreneurial spirit by shrinking government and removing subsidies and guarantees to big businesses.
The Dominoes of Default
by John Browne of Euro Pacific Capital,
The sovereign debt crisis in Greece has drawn attention to countries with similar fiscal conditions, including the United Kingdom. Fueled by socialist fiscal policies, the debt ratio in Britain is rapidly approaching Greek levels. The pound sterling has lost 25 percent of its value relative to the U.S. dollar since mid-2008. U.S. sovereign debt is in nearly the same proportion relative to GDP as debt in the U.K. If the U.K. defaults on its debt, the U.S. may be the next domino to fall.
Don't Bet on a Recovery
by Peter Schiff of Euro Pacific Capital,
Consumer spending increased 0.5 percent in January, but contrary to popular belief, this is not evidence of a bona fide economic recovery. Incomes and credit are still down, while the savings rate fell to its lowest level since 2008. Our government's plan for economic recovery is to print a bunch of money and give it to consumers to spend. This is not a plan for recovery but a recipe for disaster.
Will the Pause Refresh?
by John Browne of Euro Pacific Capital,
Western governments allowed their structural deficits to fester during the current lull in the economic storm. Major players in the world financial system such as the United Kingdom and the United States now face the threat of default. Countries such as China, India and Switzerland that have pulled their wealth into the sturdy shelter of gold, by contrast, will likely emerge battered but viable.
Paper Hangers
by John Browne of Euro Pacific Capital,
The 80-year decline in central banking discipline is the biggest problem facing developed economies. Finance ministers from Washington to London, Tokyo, Madrid and Athens are attempting to fill fiscal gaps by issuing greater quantities of currency and debt. Governments need to curtail spending in order to meet financial obligations.
Fear Takes the Wheel
by Peter Schiff of Euro Pacific Capital,
Peter Schiff of Euro Pacific Capital says in his economic commentary that the recent strength of the stock market may be more attributable to fears of inflation than an improving economy. Growing U.S. debt levels threaten to swamp to dollar, and are leading investors away from dollars and treasury bonds.
Euro Trashed?
by John Browne of Euro Pacific Capital,
John Browne of Euro Pacific Capital says in his market commentary that Greece's debt crisis represents the first real test of the eurozone. A bailout of the Greek government financed by Germany and other EU member states might stabilize the euro in the short term, but would put the union on a path toward gradual monetary collapse. On the other hand, a Greek default might hurt in the short term but would preserve the integrity of the currency.
The Precarious State of Our Union
by Peter Schiff of Euro Pacific Capital,
?In this week's much anticipated State of the Union address, President Obama again demonstrated his poor understanding of the fundamental problems that confront our nation. By following the advice of the same people who helped guide our economy to the precipice of total collapse, Obama now threatens to push it over the edge.? Schiff criticizes Obama?s policies as being anti-free market, specifically excessive regulation and federal spending.
Results 451–485
of 485 found.
