Sunday, May 31, 2009

Gas Prices

The price of gas, rising for the 33rd straight day, has reached $2.50 a gallon, motorist group AAA reported Sunday.

The spike of more than 20% in a month is hitting Americans in their wallets and causing concern among some experts.

read the CNN article

Big Green Egg and Baby Back Ribs

Baby back ribs: Yellow mustard and rub.

3 hours later
5.5 hours later

Friday, May 29, 2009

Steak and the Big Green Egg

1.81 pound New York strip. Seasoned with Kosher salt and fresh ground black pepper.

The coals. Dome temperature was reading 600 degrees.

Perfect sear marks after 1 minute cooking. Dome was open during the sear.

The way I like it. Blue. Nice crust and cold raw center.

This was an experiment with the T-Rex method. Pulled the steak after the sear. Closed the vents on the BGE for about 15 minutes to get temp down. 5 minutes one side, 4 minutes the other.

False Recovery?

Legendary investor Jim Rogers told CNBC on Wednesday he is not short or hedged in anything at the moment, but buying Japanese Yen. The next crisis in his eyes is in currencies which makes sense since sovereign states have taken much of the bad debt from the banks and piled them onto their own balance sheets.

The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved, he said.

His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth...

Governments have not solved the essential problems that caused the crisis but instead they "flooded the world with money," according to Rogers. Trying to solve the problem of too much consumption and too much debt with more consumption "defies belief" and will not work, he said.

The price of oil is also likely to remain high despite the fact that the recession is taking its toll on demand, he said.

"You know supplies worldwide are declining at the rate of anywhere from 4% to 6% a year, yes, demand is down at the moment but in longer term, unless somebody discovers a lot of oil very quickly, the surprise is going to be how high the price of oil stays, and how high it eventually goes," Rogers added.

The next financial meltdown will be in the currency markets, as central banks around the world have been printing money, giving the appearance of massive government intervention to weaken their currencies, legendary investor Jim Rogers, Chairman, Rogers Holdings, told CNBC on Wednesday.

"At the moment I have virtually no hedges, I suspect it is going to be the next problem, big crisis will be in the currency markets, I'm trying to figure out what to do there," Rogers said.

"If I am right, you're going to see a lot of currency problems in the next decade or two," Rogers said.

Governments around the world are doing their best to destroy currencies, many currencies in fact. And people need to understand that; if they don't understand it now, they're going to find out, they're going to find out the hard way," he added.

read the entire article

My thoughts: We might achieve a recovery on paper, but true economic prosperity could be years down the road.

Tuesday, May 26, 2009

Gerald Celente on the Real Crash

Celente predicting 2012 as the date for real economic trouble.

6 Month High for Oil

Light, sweet crude for July delivery rose 78 cents, or 1.3%, to settle at $62.45 a barrel Tuesday.

That's the highest settle price since Nov. 5, and the fourth day in a row that oil has settled above $60...

The national average price for a gallon of regular unleaded gasoline increased to $2.425, up 1 tenth of a cent from the previous day's price of $2.424, according to a daily survey by motorist group AAA.

In the last 28 days, the average price of gas has jumped 37.7 cents or 18.4%. The average price of a gallon of gas is still down $1.68 or 41% from the record high price of $4.114 that AAA reported on July 17, 2008.

read the CNN article

Sunday, May 24, 2009

Gerald Celente on the "Bailout Bubble"

“We’re looking at a bailout bubble that’s way bigger than the dotcom bubble before it and the real-estate bubble that we’re now getting out of, or attempting to,” Celente said.

“This is unprecedented; the economic system is being restructured,” he said...

When this bubble bursts, there’s no reinflating it because of the government intervention into it so deeply,” he said.

As you look through history, it seems like governments become emboldened by their failures,” he added.

Celente pointed out that according to the Italian fascist leader Benito Mussolini, the merger of state and corporate powers was called fascism.

“We could call this fascism lite,” he said, referring to the government involvement in free enterprise. “After these kind of catastrophic collapses, sometimes they’re followed by war.”

read the article

My thoughts: This coupled with what Peter Schiff was arguing at his Goggle speech paints a bleak picture. Instead of the end of the recession that many are projecting, we could be at the beginning of a period that will make the transformations to the American economy that occurred during the New Deal look small.

Federal Funds Rate to Remain Near Zero

The U.S. Federal Reserve is likely to keep benchmark interest rates near zero for a while in an economy that is pulling out of a steep decline and appears on course for a very gradual recovery, Fed Vice Chairman Donald Kohn said Saturday.

"The economy is only now beginning to show signs that it might be stabilizing, and the upturn, when it begins, is likely to be gradual amid the balance sheet repair of financial intermediaries and households," Kohn told a conference at Princeton University.

"As a consequence, it probably will be some time before the FOMC will need to begin to raise its target for the federal funds rate," he said, referring to the Fed's policy-setting Federal Open Market Committee...

"To ensure confidence in our ability to sustain price stability, we need to have a framework for managing our balance sheet when it is time to move to contain inflation pressures," he said.

read the CNN article

Peter Schiff at Google

from April 2009
the speech runs about 42 minutes with Q&A following

Cartoon: Free Trade

Thursday, May 21, 2009

The Economy: Worse than Thought

The Federal Reserve's latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.

The Fed's forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.

The Fed also now expects the gross domestic product, the broadest measure of the nation's economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.

read the CNN story

My thoughts: What happened to the green shoots? They must have been weeds.

Sunday, May 10, 2009

Peter Schiff on the False Recovery

Recently released short-term economic data, including unemployment claims, non-farm payrolls, home sales, and business spending, which had been so unambiguously horrific in February and March, are now just garden-variety awful. With the Wicked Witch of Depression now apparently crushed under the house of Obamanomics, the Munchkins of Wall Street have sounded the all clear, pushing the Dow Jones up 25% from its lows. But the premature conclusion of their Lollipop Guild economists, that the crash of 2008/2009 is now a fading memory, is just as delusional as their failure to see it coming in the first place...

It is simply an illusion, and not a very good one at that. By throwing money at the problem, all the government is creating is inflation. Although this can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people...

We are currently suffering from an overdose of past stimulus. A larger dose now will only worsen the condition. The Greenspan/Bush stimulus of 2001 prevented a much-needed recession and bought us seven years of artificial growth. The multi-trillion dollar tab for that episode of federally-engineered economic bullet-dodging came due in 2008. The 2001 stimulus had kicked off a debt-fueled consumption binge that resulted in economic weakness, not strength. So now, even though the recent stimulus administered a much larger dose, we will likely experience a much smaller bounce...

My guess is that, at most, the Bernanke/Obama stimulus will buy two years before the hangover sets in. However, since this dose is so massive, the comedown will be equally horrific. My fear is that when the drug wears off, we will reach for that monetary syringe one last time. At that point, the dosage may be lethal, and the economy will die of hyperinflation...

So let the Munchkins dance for now. But remember, the Witch is not dead; only temporarily stunned by an avalanche of fake money.

read the entire essay

Saturday, May 9, 2009

Peter Schiff on the False Recovery

My thoughts: Schiff is correct. The fundamentals are not sound. The groundwork has been laid for massive inflation. Unemployment is not 8.9%. There has been two consecutive quarters of GDP decline of over 6%. The situation is not good. Thw stock market has bounced back about 30% over the March 9th lows. People forget that dead cats bounce also. When GDP figures start climbing the Fed will be truly tested. It will fail. The next period of GDP growth will not likely exceed 3 years and inflation will top 10%. Bernanke will not know how to react.

Cartoon: Stock Market for Dummies

Friday, May 8, 2009

April 2009 Unemployment Rate 8.9%

Over the last six months, a total of 3.9 million jobs have been lost and, since the recession began in December of 2007, the U.S. economy has shed 5.7 million jobs.
The jobless rate jumped from 8.5 percent in March to 8.9 percent in April, reaching its highest level since the September 1983 mark of 9.2 percent and the total number of unemployed now stands at 13.7 million, up from 13.2 million in March. The post-WWII high for unemployment came in December of 1982 at 10.8 percent.

Cartoon: Cost-Cutting

Tuesday, May 5, 2009

Peter Schiff on Chrysler and the Auto Industry

Chrysler has not been profitable for years; and with Washington calling all the shots, the potential for long-term viability has been dashed.

A real bankruptcy is the only solution. In it, current shareholders get wiped out, current contracts and obligations are voided, and the remaining assets, both physical and intellectual, are sold to the highest bidders. But the process would create the opportunity for new management, with private capital, to buy auto-producing assets for pennies on the dollar, hire skilled auto workers at much lower costs, scrap out-of-date business practices, and produce cars cheaply and profitably. Under the guise of "saving jobs," the Administration has disrupted this process...

Giving control of Chrysler, and soon GM, to the UAW and the government will enshrine a culture of failure and seal Detroit's fate. Both companies will become government-sponsored entities, not too dissimilar from Amtrak or the Post Office, forever relying on taxpayer funds to create products of dubious quality.

read the essay