Peter Schiff at Henry Hazlitt Memorial Lecture

Great lecture by Peter Schiff for the Mises Institute. 

Check the video here.

Great Summary of the Current Shitstorm the U.S Economy is in and How it Got There

The Big Takeover

by Matt Taibbi

It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

Read the rest here.

Yikes!

Good Time to be a Contrarian?

~ Below is an interesting article with the father of contrarian investing, David Dreman. As a true contrarian, Dreman recommends investing in, you guessed it, banks and other heavily discounted equities. He specifically points out KBE, XLF (The former is an financial index fund and the later is an ETF), and GE. Other banking funds that might be of interest are VFH, UYG, IYF. Remember, these funds are not for the faint of heart and carry considerable downside risk. Over the long haul (5, 10, 15 years) some of these heavily discounted funds might prove extremely profitable, yet it takes a lot of courage to invest when 'blood is in the streets.' As the great Warren Buffett once pointed out, "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."

Read the David Dreman article here.

Who got AIG's bailout billions?

~ The saga continues, another day another billion dollars unaccounted for. Looks like U.S taxpayers are financing foreign firms such as Deutsche Bank AG and Societe Generale. According to Congressman Paul Kanjorski, failure to do so would have led to a complete collapse of the European banking system. Seems like the Democrats have taken it upon themselves to not only bail out insolvent U.S firms, but foreign businesses as well. Should be interesting to see how Wall Street reacts this week. 

Who Got AIG's Bailout Billions?

by Toni Reinhold

NEW YORK (Reuters) – Where, oh where, did AIG's bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.

The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured intoAmerican International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.

Read the rest here.

Bernanke Won't Reveal Which Banks Received Bailout Money

The Chairman of the Federal Reserve will not reveal which of his Wall Street cronies received bailout money for fear that it might 'tarnish' their reputation. Seems like his strategy is working. Fannie, Freddie, and Citigroup have all performed well over the last several months. Banana Republic U.S.A?

Peter Schiff on BNN

Peter's buying Canadian stocks. Looks like it might be a good time to start investing in the oil sands and mining sector. 

This is Hilarious! CNBC, Are You Listening?

Krugman Thinks We Should Spend a Bit More

According to Krugman the Obama stimulus package should have been 50 -60 percent bigger, an amount that would probably have made Keynes blush were he around to witness it. This is the same Krugman that served as an economic advisor to Enron in the late 90s and was awarded the Nobel prize for economics in 2008. Never mind that future generations will be saddled with debt and forced to pay for the sins of irresponsible lenders and borrowers for ad-infinitum , the Boomers want their retirement! 

A Sign of The Times: Spam Now a Member of The S&P 500

How fitting that Hormel Foods Corporation, maker of you guessed it, Spam, has replaced American Capital Ltd in the S&P 500. I had a good chuckle when I read this. It is the perfect metaphor of the current debacle and Depression (with a capital D) that we are in. Enjoy those Spam burgers, we might be eating them for a while. 

Will China Save Western Capitalism?

~ Interesting article by Bill Bonner over at the Daily Reckoning, I was most surprised when he mentioned the Shanghai has outperformed the S&P by 65 percent YTD. If it weren't for the Chinese financing Mr. Obama's current spending spree, I suspect the difference would be even greater. 

China: The Hope of the World Economy?

03/05/09 Paris, France Sweden to GM/Saab: Drop Dead!

Finally, a nation with a little backbone…a little integrity…a little good sense.

And guess what, it’s that dreary socialist refrigerator – Sweden. Asked to bailout its GM-owned automaker, Saab, the country’s Prime Minister just said ‘no.’ Good for him…

“Voters did not pick me to buy loss-making car factories,” he explained.

But it’s a time of contradictions, paradoxes and oxymorons. Up is down. Right is left. In is out. Good is bad.

The socialists are the only ones protecting the free market, now. Americans are scuttling it with every chance they get. The stocks of capitalist companies are going up in communist China…but in America, they’re going down. Since November, the Shanghai index has outperformed the S&P by 75%.

And back in the United States, projects that were considered too marginal to justify spending money a year ago are now thought to be indispensable. And the IOUs of the biggest spendthrift on the planet are the hottest item on the market. Ten-year Treasury notes are now priced to yield only 2.99% – just as the Obama administration announces a $1.75 trillion budget deficit.

Read the rest here.

Books I Recommend

Here are some books you might want to read to better understand the current financial environment. 

Economics:

- Mobs, Messiahs, and Markets ~ William Bonner

- Extraordinary Popular Delusions and the Madness of Crowds ~ Charles Mackay

- Economics in One Lesson ~Henry Hazlitt

- Meltdown ~ Thomas Woods

- Devil Take the Hindmost ~ Edward Chancellor

- The Wealth of Nations ~ Adam Smith

- The Road to Serfdom ~ F. A Hayek

Investing:

- Four Pillars of Investing ~ William J. Bernstein

- Hot Commodities ~ Jim Rogers

- A Bull in China ~ Jim Rogers

- Crash Proof ~ Peter Schiff

- Reminiscences of a Stock Operator ~ Edwin Lefevre

- Trade Your Way to Financial Freedom ~ Van Tharp

- A Random Walk Down Wall Street ~ Burton G. Malkiel

- Contrarian Investing ~ Anthony Gallea and William Patalon

- Neatest Little Guide to Stock Market Investing ~ Jason Kelly (Basic primer on investing)

- The ETF Book ~ Richard Ferri

- Where are the Customers' Yachts? ~ Fred Schwed

Looking for a Job?

Guess all those 'broke'rs and investment bankers now have to find a real job now that they have destroyed the world economy. Good Luck!

Where to Put Your Money (If You Have Any Left). Perma-Bear Peter Schiff Says Invest Outside of U.S

697,000 U.S Jobs Lost in One Month

~ At this rate there will be over 8 million job losses by the end of the year, a staggering number. How the market can rally after news like this is even more disturbing. I guess all those chumps who bought McMansions are going to have to finance those ARMs while on the dole. Oh, I forgot, they are getting bailed out so you will have to foot the bill.

U.S. private sector cuts 697,000 jobs in February

By Burton Frierson

NEW YORK (Reuters) - U.S. private sector job losses accelerated in February, according to a report by ADP EmployeServices that suggests hefty employment declines are on the way in the government's payrolls report due on Friday.

ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.It was the biggest job loss since the report's launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy.

Read the rest here.

Good News for a Change

Leuthold Says Stocks Will Surge, Depression Avoided

By Betty Liu and Lynn Thomasson

March 4 (Bloomberg) -- Steve Leuthold, whose Grizzly Short Fund returned 74 percent last year betting against U.S. stocks, said now is the time to buy equities because investors are too fearful about the economy.

“These comparisons people make with the Great Depression are totally out of touch with reality, and pretty stupid,” he told Bloomberg Television in an interview today. “We’ve been in much worse, much more panicked and more scary situations in the U.S.”

The economy isn’t as bad as it was in 1974, when stocks began rebounding, said Minneapolis-based Leuthold. He predicted the Standard & Poor’s 500 Index will surge to at least 1,000 in 2009, representing a gain of 44 percent from yesterday’s 12-year low of 696.33. The benchmark measure of U.S. stocks rose 1.4 percent to 706.08 at 9:56 a.m. in New York on speculation China will add to a 4 trillion yuan ($585 billion) spending plan.

Read the rest here.

Where is the Bottom?

~ According to the folks over at Stingy Investor, we may be close (within 50 points on the S&P 500). They come to this conclusion when factoring in inflation and comparing this bear market with previous bears (1929-33 excluded).

Party like it's 1968

After another down day on the markets we're in shooting distance of 1968 prices on the S&P500. That is, if you take inflation into account.

The following graph shows the real S&P500 price index with current price levels highlighted by the green line. The red line shows what we'd be in store for if we suffer from a repeat of the 1929-32 collapse.

Today I want to highlight the yellow line which reflects a further 10% decline from today's price. That's about what it would take for the S&P500 to be roughly even with its inflation-adjusted level in 1968 based on monthly prices.

Read the rest here.

Roubini On Why Entire Economic System is Bankrupt

Let AIG Go Bankrupt

Jim Kunstler on Peak Oil and the Precarious Future of Agriculture

WHAT NEXT?

Isn't that a question, though....

The Peak Oil story was never about running out of oil. It was about the collapse of complex systems in a world economy faced by the prospect of no further oil-fueled growth. It was something of a shock to many that the first complex system to fail would be banking, but the process is obvious: no more growth means no more ability to pay interest on credit... end of story, as Tony Soprano used to say.

There was a popular theory among Peak Oilers the last decade that the world would enter a "bumpy plateau" period when the global economy would get beaten down by peak oil, would then revive as "demand destruction" drove down oil prices, and would be beaten down again as oil prices shot up in response -- with serial repetitions of the cycle, each beat-down taking economies lower -- the only imaginable outcome being some sort of quiet homeostasis. This scenario did not play out as expected. It was predicated on a mistaken assumption that all systems would retain some kind of operational resilience while ratcheting down. Anyway, the banking system was mortally wounded in the first go-round and the behemoth is dying hard.

Read the rest here.

Garth Turner on Canadian Real Estate and the Stock Market Recovery

~ Interesting article by former MP Garth Turner. While his outlook is bleak, we can start seeing a recovery about three years from now.


Economic Update

Recently I posted that the economy will get better. The road back will be led by the stock market, and the rally will be spectacular. Things, I said, will change in days, not months.

This will happen. But jobs, real estate, consumer spending and family finances will take years to catch up.

You see this today and will again Tuesday. Things are getting damn awful, which will lead us closer to the bottom of an abyss that must be plumbed prior to any recovery. This final leg down will be numbing and difficult. Hang on.

Read the rest here

Depression II?

Jim Rogers on Coming U.S Civil Unrest