Central Banks Pushing on the String!
Last week, we were treated to the evidence that the central banks are very concerned about the future of the banking system and the financial markets worldwide. Billions dollar equivalents in paper currency and computer blips were created out of thin air in an effort to prime the borrowing pumps. Also, the interest rates were artificially lowered, as well. However, banks were reluctant to loan out currencies and borrowers were few. The banks have pushed on the string successfully in the past, but they are not reaching the desired goal at this point in time.
The result of the extra cash has been a rush of the western economies into stagflation. That is, there is price inflation of most prices without an corresponding increase in wages. The temporary lower price of gasoline has served to hide or lessen the price inflation, too.
The retail industry has had some increase in the value of sales. However, much of this has been due to the heavy discounting which impacts negatively on profit margins and the financial ability for these businesses to pay wages.
The mortgage and financial companies have laid off a substantial number of workers over the last few weeks. This is hidden in the government unemployment figures, because of the manipulation of the numbers. The lay offs are bound to be hitting the home construction businesses too.
On the real estate fronts, we are seeing an increase in the inventory of unsold homes on the market and extended period of time until sales. It seems that we have yet to see the full impact of the bursting housing bubble. Keep in the back of your mind that the housing bubble was created by central bank increases of the supply of unbacked currency in circulation and artificial lowering of interest rates. This is now see by them as the way to keep the economy moving. By now, it is obvious that this is not the way to build a sound economy, but the way of creating bubbles which eventually burst causing great financial disruption in markets throughout the world. So the latest actions are bound to increase rather than solve the existing problems.
The Dow is giving us another down day with the DJI down some 133+ at present. The S&P 500 is down 15+, too. The dollar has rebounded a bit, but seems to be backing off again. Gold is at 794.50 up about 1.50 and silver is even at 13.81. The cartel is still working diligently to depress the prices of the precious metals. Over night the Asian markets moved gold up some before it opened here in America. Guess their markets are a bit freer than ours. Perhaps, were the precious metals traded in other than the dollar, we would have a better reflection of the true market prices.
The Exchange Traded Trusts (ETFs) which are into the precious metals continue to purchase more gold and silver. The Canadian Exchange Fund (CEF) and GLD are two of the betters ones available. They provide a means of purchasing the metals without holding and guarding them. Virtually all of the mining stocks are suffering another bad day providing opportunity for additions to our portfolios. The long term trend of gold is strong and a triangle is being formed in the prices on the 1 Year Gold Graph at www.Kitco.com. This is a positive formation, but we will have to see if the price breaks out upward or downward. Remember the cartel is still powerful in limiting the prices of the precious metals. Some day, the non-free market interests will lose their control. Until then, hang tough!
It is wise to keep dollars on hand for current expenses and some extra for emergencies which may arise. It is also wise to limit debt and to pay down long term debt as much as possible. In financial situations; such as, the present, it is good to plan to survive even with the loss of your job. We could well be headed into a recession. The recent central bank actions reveal that they see such coming and they are pulling out the stops in hope of preventing it. Economist are predicting recession for 2008. On the other hand, so much pessimism about the world wide economy could be a detractor and we could once again be spared the hardship thereof.
Rest in the assurance that the Sovereign God of all is fully in control and working His will in the economy and everything else. His people can rejoice in the fact that He is working all things for our eventual good and that nothing can separate us from His love in Jesus Christ. Praise Him daily for His care and love.
Best to each, Doug
The result of the extra cash has been a rush of the western economies into stagflation. That is, there is price inflation of most prices without an corresponding increase in wages. The temporary lower price of gasoline has served to hide or lessen the price inflation, too.
The retail industry has had some increase in the value of sales. However, much of this has been due to the heavy discounting which impacts negatively on profit margins and the financial ability for these businesses to pay wages.
The mortgage and financial companies have laid off a substantial number of workers over the last few weeks. This is hidden in the government unemployment figures, because of the manipulation of the numbers. The lay offs are bound to be hitting the home construction businesses too.
On the real estate fronts, we are seeing an increase in the inventory of unsold homes on the market and extended period of time until sales. It seems that we have yet to see the full impact of the bursting housing bubble. Keep in the back of your mind that the housing bubble was created by central bank increases of the supply of unbacked currency in circulation and artificial lowering of interest rates. This is now see by them as the way to keep the economy moving. By now, it is obvious that this is not the way to build a sound economy, but the way of creating bubbles which eventually burst causing great financial disruption in markets throughout the world. So the latest actions are bound to increase rather than solve the existing problems.
The Dow is giving us another down day with the DJI down some 133+ at present. The S&P 500 is down 15+, too. The dollar has rebounded a bit, but seems to be backing off again. Gold is at 794.50 up about 1.50 and silver is even at 13.81. The cartel is still working diligently to depress the prices of the precious metals. Over night the Asian markets moved gold up some before it opened here in America. Guess their markets are a bit freer than ours. Perhaps, were the precious metals traded in other than the dollar, we would have a better reflection of the true market prices.
The Exchange Traded Trusts (ETFs) which are into the precious metals continue to purchase more gold and silver. The Canadian Exchange Fund (CEF) and GLD are two of the betters ones available. They provide a means of purchasing the metals without holding and guarding them. Virtually all of the mining stocks are suffering another bad day providing opportunity for additions to our portfolios. The long term trend of gold is strong and a triangle is being formed in the prices on the 1 Year Gold Graph at www.Kitco.com. This is a positive formation, but we will have to see if the price breaks out upward or downward. Remember the cartel is still powerful in limiting the prices of the precious metals. Some day, the non-free market interests will lose their control. Until then, hang tough!
It is wise to keep dollars on hand for current expenses and some extra for emergencies which may arise. It is also wise to limit debt and to pay down long term debt as much as possible. In financial situations; such as, the present, it is good to plan to survive even with the loss of your job. We could well be headed into a recession. The recent central bank actions reveal that they see such coming and they are pulling out the stops in hope of preventing it. Economist are predicting recession for 2008. On the other hand, so much pessimism about the world wide economy could be a detractor and we could once again be spared the hardship thereof.
Rest in the assurance that the Sovereign God of all is fully in control and working His will in the economy and everything else. His people can rejoice in the fact that He is working all things for our eventual good and that nothing can separate us from His love in Jesus Christ. Praise Him daily for His care and love.
Best to each, Doug
posted by Doug @ 12:43 PM
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