Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 03.25.2008
Next Stop: $2,000 Gold Last week has to be one of the most stunning in the history of financial markets.It started with the weekend sale of venerable Bear Stearns to JP Morgan for the laughably low price of $2 a share, setting the tone for what will be remembered as a prophetic event for the week that followed, and ultimately, for the months that will follow.The Fed has essentially funded the sale of a distressed asset to avoid the collapse of Bear Stearns, which, if allowed to happen, would put so many other banks into a state of insolvency that the domino effect would ultimately cause more big banking names to fall. The term "capitulation" comes to mind. So what has happened, is the Fed is exercising its right to print money with renewed abandon, comforted by the short term validation of its strategy afforded by the Dow's responsive surge.
Looks Like There's a Silver Shortage Worried by the steep correction in silver? Don't worry, just reduce your leverage. Silver has always corrected by roughly a third after its sharp ascents in the past 5 years. This is due to the extreme tightness of this market where a billion of whatever fiat currency still can do a lot of damage. At one point the short sellers will be run over by the very real freight train of exploding physical demand that has led to what looks like a worldwide shortage in bullion. The US Mint has been out of the gold sale business for almost half a year now, filling orders on very few days since September. Currently only the new 2008 gold proof Eagles are on offer. All uncirculated bullion coins are not available. Platinum coins have not been available in a while too. Now the physical delivery problems spread to silver as well. The US Mint says it will ship silver eagles again after April 9. But taking it from past experience, this schedule may be delayed again.
Home prices fall a record 10.7% in past year Home prices in 20 major U.S. metro areas have plunged a record 10.7% in the past year as prices continued to decelerate, Standard & Poor's said Tuesday. The 20-city Case-Shiller home price index fell a record 2.4% in January, the 18th consecutive decline in prices. For 10 major cities, prices fell 2.3% in January and 11.4% for the past 12 months. "No markets seem to be completely immune from the housing crisis,' said David Blitzer, chairman of the index committee at S&P. Of the 20 cities, only Charlotte, N.C., has managed any gains in the past year, rising a meager 1.8%. For the fifth straight month, all 20 cities recorded lower prices compared with the previous month.
Food stamps double since '01 Nearly one in 10 Ohioans now receives food stamps, the highest number in the state's history. Caseloads have almost doubled just since 2001, with 1.1 million residents now collecting benefits, according to the Ohio Department of Job and Family Services.Low wages, unemployment and the rising cost of groceries, gasoline and other necessities are to blame for financial hardships facing many Ohio families.Caseloads have been rising steadily in the past seven years, said Brian Harter, spokesman for the state agency which oversees the food-stamp program."Look at unemployment during this time," he said.Ohio's jobless rate is 5.3 percent, up from 4.4 percent in 2001.
March consumer confidence down, outlook grim U.S. consumer confidence fell in March, the Conference Board reported Tuesday, and expectations hit a 35-year low as pessimistic views of the business climate, the job market and personal income weighed on sentiment. The March consumer confidence index fell to 64.5 from a revised reading of 76.4 in February. Economists surveyed by MarketWatch had expected a March reading of 73.3. Confidence has taken a hit in recent months from worries about jobs, housing prices and the economy. Consumer confidence is at its lowest since the Iraq War in 2003. "Looking ahead, consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," said Lynn Franco, director of consumer research at the private Conference Board.
U.S. supply will determine what happens to your buying power When was the last time you read about the money supply, other than in this column? In my view, you would do well to start paying attention to the money supply and its rate of growth, since it has significant implications for you in both the short and in the long run. In the short run, the amount of money that the Federal Reserve pumps into the economy will determine what will happen to the buying power of your dollar and mine. Over the longer term, it will determine the size and scope of the next bubble. How this works is nothing more mysterious than the law of supply and demand. In the case of our dollars, right now, their supply is far outpacing their demand. When this happens to any good or service, its value falls - and money is no exception.
Desperate for cash, many in U.S. taking high-interest 'payday' loans As hundreds of thousands of American homeowners fall behind on their mortgage payments, more people are turning to short-term loans with extreme interest rates, just to get by.While hard figures are hard to come by, evidence from nonprofit credit and mortgage counselors suggests that the number of people using these so-called "payday loans" is growing as the U.S. housing crisis deepens."We're hearing from around the country that many folks are buried deep in payday loan debts as well as struggling with their mortgage payments," said Uriah King, a policy associate at the Center for Responsible Lending.A payday loan is typically for a few hundred dollars, with a term of two weeks, and an interest rate as high as 800 percent. The average borrower ends up paying back $793 for a $325 loan, according to the center.
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