Economy

The Argument for Gold Currency

Mark Noonan4 Comments

In video form:

The author does make some rather outlandish claims – World War One is probably the one war in human history which no human action could stop.  And it would have been fought just as bitterly and as long even if everyone had to use gold for all transactions.  But the basic thrust is true – fiat money allows irresponsibility.  And both in government and private transactions.  You don’t fret about fake money which will lose its value…so you are easily swayed to spend it on all manner of stupid things.  Things of real value, on the other hand, tend to be carefully husbanded.

But we can’t go back to gold!  So goes the consensus.  But I wonder why anyone believes this – if anyone can come up with a good reason, I’m all ears.  But for me, it is a very simple operation.

You pick a date and say on that date all US currency will be revalued at a 100-1 ratio:  for each 100 fiat dollars, you now have 1 gold dollar.  This is done universally:  you’re $20 an hour wage now becomes 20 cents an hour.  Your $200,000 house now becomes a $2,000 house, and so on.  The $1,600 ounce of gold now becomes $16.  Hey, presto, we can make a $20 gold piece, again.  You know, like we used to.

Gold for the higher denominations ($20 and up), silver and copper for the lower ($10 on down, with real copper used for pennies; though we’d probably have to start minting half-pennies, too).  Paper currency could still be issued, but it would be chained like iron to the amount of gold and silver in the treasury.  The nature of finance dictates you can issue more paper currency than there is gold and silver, but you can’t go too far…if you do, the value of the paper currency becomes worthless as people hoard their gold currency and start using the paper for other purposes.  There can still be chicanery, but not on such a grand scale that 98% of the people’s money is stolen.

Gold and silver are decreed as the currency of mankind – fiat money is the currency of con artists.  A free people cannot long endure money men using fake money to steal the wealth of a nation.  We must know that when we labor and earn a dollar that the dollar will remain constant in value…even if we just stick it in a coffee can for 50 years.  For nearly 200 years America grew and thrived under gold currency – for 40 years we have weakened and shriveled under fiat currency.  Time to change – and as we are genuinely conservative, our best bet is to change back to where we were, rather than trying to “conserve” the fiat currency of liberalism.

HAT TIP:  Mish’s

Poll: 63% Say Economy Getting Worse

Mark Noonan8 Comments

From Rasmussen:

After falling to a new two-year low on Friday, consumer confidence fell even further on Saturday…

…Only 9% rate the economy as good or excellent while 61% say it’s in poor shape. Sixteen percent (16%) say it’s getting better while 63% believe it is getting worse…

Trust me on this on, the debt talks and whatever results from them are not what is on Obama’s mind – it is what the economy will do over the next 16 months.

And that ain’t looking too good for Barry right now…

Obama Moves Towards Fixing the Housing Crisis

Mark Noonan32 Comments

Only a bit late, but there is actually something good here – from the Wall Street Journal:

The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter.

While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels…

It was on July 27th, 2010 that I provided a revised plan for fixing housing.  Here is the central part:

…Essentially, increasing demand is not something we can do in any time frame that will work.  And, meanwhile, the longer we go on, the worse it gets.

If you can’t do much with demand, then it is to supply we must turn.  How do we lower the supply of houses actually or potentially on the market for sale?

You turn them in to leased houses.

Millions of potential home owners cannot buy homes because they are out of work, have reduced income or have wrecked credit.  With all that, they still have to live somewhere, and while some of them are in desperate straights, most of them have some sort of income (and, in a lot of cases, just as much income as they had before they lost their homes).  Can’t buy?  Rent.

The trouble is that banks don’t want to be land lords.  This is understandable, and I wouldn’t ask them to be.  But they can put the houses in to corporate structures which do manage rental properties and which can use at least part of the rental income to provide a revenue stream for the banks.  We can put a big incentive on this by making the revenue from rental housing tax free for five years.  The key is that time frame – though we can go as low as two years:  but we want these houses off the market until we have at least a chance of reviving the economy and thus providing a solid base for home demand.

The idea here is to take the massive number of foreclosed homes and lock them away for two to five years – to get out of the housing market the houses which simply don’t have a buyer, and won’t have a buyer for some years to come.  But we can’t just let them sit there unoccupied and deteriorating, nor can we expect banks to just sit on things which don’t produce any revenue.  We also don’t want to increasingly force the banks in to fire sale prices for the homes they hold as that will just accelerate and make worse the problem we have…

I don’t have hundreds of taxpayer-funded staffers.  I’m not some sort of brilliant economist.  I’m just this guy who thinks about things and then writes down what he thinks about – I figured this out a year ago (and, actually, longer ago than that – this is a revised plan, some months earlier I had put it out in a slightly different form).   It just amazes me how completely incompetent government is.  The fact that it is July of 2011 and the housing market has entered a double dip recession before someone in Obamaland starts thinking about this is a sad commentary on the people running the show…they haven’t a clue.  But 2012 is coming and that is starting to concentrate some minds over there.

The one thing we can’t afford to do, however, is have Obama actually in charge of the effort.  All he’ll wind up doing is ensuring that his cronies get a big payday.  We need to really move on this – my plan or something like it.  And to do it right it will have to be genuinely transparent, will have to benefit actual people, and should probably be handled by local banks rather than Obama and Bernanke’s buddies in the “too big to fail” entities.   And given Reid’s background in corrupt land deals, it would probably be better if he was kept away from it, too. The House should take up the idea, craft it in to legislation and then hand it to Obama – doing it in such a manner that it is such a well-done bill that Obama and Reid daren’t try to modify it.

One thing is certain – if we don’t do something, then housing prices could collapse entirely.  And I mean that – like a house worth $125,000.00 today being worth $50,000.00 a couple years from now…and with hundreds of thousands of homes essentially abandoned and deteriorating like Detroit housing.  We’re in a housing death spiral – we have to try and stop it; my plan is to take the houses off the market and leave them for the use of the regular, American people.  If someone has a better plan, I’m all ears…but we have to do something, and do it quickly.

Obamunism! Mass Layoffs Rising

Mark Noonan21 Comments

From Yahoo Finance:

Putting pressure on an already lousy job market, the mass layoff is making a comeback. In the past week, Cisco, Lockheed Martin and Borders announced a combined 23,000 in job cuts. (See: Another Retailer Bites the Dust: Borders Doomed by Amazon Deal, Davidowitz Says)

Those announcements follow 41,432 in planned cuts in June, up 11.6% from May and 5.3% vs. a year earlier, according to Challenger, Gray & Christmas.

Meanwhile, state and local governments have cut 142,000 jobs this year, The WSJ reports, and Wall Street is braced for another round of cutbacks. This week, Goldman Sachs announced plans to let go 1000 fixed-income traders…

As I’ve said before, I rate my chances of having my job by January 1st at 50/50.  Things are bad and getting worse…and getting worse all around the world.  China’s economy is crawling with bad debt and massively overheating.  Outside of Germany, Europe’s economy has already started to contract and Germany is only a bit above water.  Risk of default is spreading around the world.  Recession stares us in the face, and behind it the prospect of full blown depression.

Only a radical change of course can save the day…and Obama, I believe, doesn’t even suspect there is a problem.

HAT TIP:  Hot Air

The Doomed Democrat Party

Mark Noonan5 Comments

Richard Miniter over at Forbes:

…The long-term trends are almost all bad news for the left wing of the party.

This week’s fight over raising the federal debt limit exposes a key weakness in the warfare-welfare state that has bestowed power onto the Democratic Party: Without an ever-growing share of the economy, it dies. Every vital element of the Democrats’ coalition — unions, government workers, government contractors, “entitlement” consumers — requires constant increases in payments, grants and consulting contracts. Without those payments, they don’t sign checks to re-elect Democrats.

Like it or not, Obama is not the new FDR, but the new Gorbachev: a man forced to preside over the demise of a political system he desperately wants to save…

The welfare state is unsustainable – eventually, it does collapse upon itself.  It must grow larger but it can’t forever grow larger.  Eventually, it takes out so much from the productive economy that you don’t have enough of a productive economy to sustain growth.  That is, essentially, the condition we are in now – no more than three or four years left of this, good people, and the welfare state goes away.

Better by far, of course, if it goes away via our victory in 2012 – that is better than having Obama re-elected to continue his rear-guard efforts to sustain the failures of liberalism.  It will be far less painful, in the long and short run, if we elected a properly conservative/libertarian President and Congress in 2012 who can then carefully inter the welfare state and step by step free up our economy.

 

 

Casino Mogul Wynn Explains Obamunism

Mark Noonan41 Comments

From Seeking Alpha – a transcript of Steve Wynn’s Earnings Call:

…Well, here’s our problem. There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas. I know that I could do 10,000 more myself and according to the Chamber of Commerce and the visitors convention bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000. I believe in Las Vegas. I think its best days are ahead of it. But I’m afraid to do anything in the current political environment in the United States. You watch television and see what’s going on on this debt ceiling issue. And what I consider to be a total lack of leadership from the President and nothing’s going to get fixed until the President himself steps up and wrangles both parties in Congress. But everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating. And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime…(emphasis added)

The bottom line:  because of government policies, especially those of President Obama, Wynn simply will not expand his Las Vegas operations.  That is really all that needs be said – Obamunism is destroying the economy and we must change course if we are to prosper.

Gold to $1,600.00

Mark Noonan5 Comments

Geesh – from MSNBC:

Gold prices rallied to record highs above $1,600 an ounce in Europe on Monday, as investors spooked by the euro zone debt crisis and the threat of a U.S. default bought into the metal as a haven from risk…

First off, really wish I had listened to the old man when he wanted to buy gold at $400 or so an ounce.  Secondly, this is the world of investment giving a vote of no confidence to all governments and central banks…this is a flight to safety, and a bet that things will get even worse.

Can’t Keep Their Story Straight

Mark Noonan5 Comments

Two headlines, both from Bloomberg:

Crude Oil Trades Near Two-Day High on U.S. Economy, European Debt Optimism

Asian Stocks Decline on U.S. Economic Concern

And I generally have a lot of respect for Bloomberg’s economic reporting – but, come on!  Which is it?  Are people optimistic or pessimistic?

Honestly, I think it is ultimately a matter of no one really knowing for sure – theories say it should be this, reality is starting to show that it is quite different.   We’re all just waiting at this point – will they pull a rabbit out of the European hat?  Will China manage a soft landing?  Will the US debt be brought under control?  Or does it even matter at this point?  Have things got to a point where no matter what we do, pain is in our future?

I’m of that last view – I don’t think we can avoid some really rough times.  The best we can do with some wisdom and grit is make them bearable while we clear out the mess.  Maybe I’m wrong, but when you get a respected news source with headlines at such variance – and posted just 31 minutes apart – you can be sure that something is screwed up somewhere.

Mmmmm, Toasted Obama: My Favorite!

Mark Noonan39 Comments

From James Pethokoukis at Reuters in response to Goldman Sachs lowering GDP projections:

…Alarms bells must be ringing all over Obamaland today. Unemployment on Election Day about where it is right now? Sputtering — if not stalling — economic growth? To many Americans that would sound like the car is back in the ditch — if it was ever out. Maybe Goldman is wrong, but economists across Wall Street have been growing more bearish.

And recall that back in August of 2009, the White House — after having a half year to view the economy and its $800 billion stimulus response — made an astoundingly optimistic (PDF) forecast. Starting in 2011, with Obamanomics fully in gear and the recession over, growth would take off. GDP would rise 4.3 percent in 2011, followed by … 4.3 percent growth in 2012 and 2013, too!  And 2014? Another year of 4.0 percent growth. Off to the races, America…

Do take a look at that “astoundingly optimistic” White House forecast – as far as Obama and Co were concerned, the stimulus was going to get us rip roaring in to boom economic times.  It is all there – carefully laid our projections about how wonderful things were going to be.  I can only guess that they really believed it – after all, they were being rather arrogant in their assumptions of 2012 victory back there when questions first arose about the effects of the stimulus.  Only people who really believed in it could have looked at the 2010 data and assumed that 2011 would have 4.3% GDP growth (if we’re lucky – very lucky – we’ll see official growth at 2.5% for the year 2011; which is not nearly enough to get things rolling).  The big question:  do they still believe it?

As Pethokoukis notes at the end of his article, there is still a very short time left for Obama to change course and have a chance at a reasonably good economy for election day, 2012.  But I mean he’d really have to move fast – in the next few weeks we’d have to see serious proposals to cut the tax and regulatory burden on wealth creation for it to have a noticeable positive effect by election day.  Wait until the end of August and it will be too late – the good news would start to roll in around January of 2013, just as we’re swearing in President Bachmann.  But if they are still retaining their faith in the stimulus, then they’ll do nothing and just cross there fingers that some how, some way, what has thus-far failed will start to work in an astounding manner over the next 15 months.

And if that is the case, then the good news is that Obama won’t be re-elected – the bad news is that the economy will be very much worse before we get rid of him.

 

ObAMATEUR’s Stimulus Worked??? (Bumped)

tiredoflibbs38 Comments

The Chosen One, The Rockstar, the sort of a god, the one who sends chills up Matthew’s leg, the obAMATEUR has come up with the latest dumbed down talking point for his drones.  Are you ready?  The reason of the state of the economy and the latest down turn, he claims that this is  “evidence” that his stimulus plan worked … because as the “stimulus” is phased out, local governments are shedding jobs.  When in reality, the jobless rate steadily rose after the spendulus plan was passed – so much for the “jobs saved” talking point.

Amazing!

  • We have the worst unemployment picture since the Great Depression because Obama’s stimulus worked!
  • Over two million fewer people are working in private sector jobs in our economy because Obama’s stimulus worked!
  • We are still seeing record levels of foreclosures because the stimulus worked!

The only thing that the obAMATEUR’s stimulus plan is evidence of is that government spending does not induce a climate of economic prosperity, particularly in the private market.  The economy does not thrive when the government is making the economic choices, plus the federal government is taking $0.25 for every dollar the private sector generates.

But it was never obAMATEUR’s goal to boost the private sector but rather to keep unions, government workers and Democrat looters prosperous while non-unionites and the private sector individuals sweat it out.  So look around, America … this, what we are experiencing right now, is proof that the spendulus plan worked!  But which is it, two weeks ago he was saying that “the shovel ready jobs were not as shovel ready as he thought”.

Hmmmmmmm, it seems that the obAMATEUR is not sure himself or he needs new excuses for the coming election year.

UPDATE, by Mark Noonan:  More Obama success -from Bloomberg:

The dollar weakened against all its most-traded counterparts as Federal Reserve Chairman Ben S. Bernanke said policy makers will provide economic stimulus if needed and investor demand for higher-yielding assets increased.

The greenback fell the most in six months versus the euro as Bernanke said central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling…

If Obamunism worked then the economy wouldn’t be in danger of tanking and the Bernanke wouldn’t be firing up the printing presses.  Hope you all enjoyed the drop in gasoline prices this past month…because that is going to reverse itself right quick if Bernanke carries out his threat.