Posts Tagged ‘depreciation’

US Dollar, Housing, Oil And Food Markets Point To Dodo Bird Ending For America: The Beast Is Coming

May 2, 2011

This is your dollar.

This is your dollar on Obama:

APRIL 23, 2011
Dollar’s Decline Speeds Up, With Risks for U.S.
BY TOM LAURICELLA

The U.S. dollar’s downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency.

With no relief in sight for the dollar on any of those fronts, the downward pressure on the dollar is widely expected to continue.
The dollar fell nearly 1% against a broad basket of currencies this week, following a drop of similar size last week. The ICE U.S. Dollar Index closed at its lowest level since August 2008, before the financial crisis intensified.

“The dollar just hasn’t had anything positive going for it,” said Alessio de Longis, who oversees the Oppenheimer Currency Opportunities Fund.

The main driver for the dollar’s decline is low interest rates in the U.S. compared with higher and rising rates abroad. Lower rates mean a lower return on cash—and the pressure from that factor could intensify next week when the Federal Reserve’s rate-setting committee is expected to signal that U.S. short-term rates will likely remain near zero for many months to come. On Wednesday, Fed Chairman Ben Bernanke is scheduled to give the central bank’s first-ever press conference following a policy-setting meeting.

But it is worry about the U.S. budget deficit that is intensifying the selloff. On Monday, investors were spooked by a warning from Standard & Poor’s that it might take away the U.S. government’s coveted AAA rating status amid concerns the Obama administration and Republicans in Congress might not be able to agree to significant reductions in the deficit.

In addition, Chinese government officials have stepped up rhetoric hinting they might diversify their $3 trillion of currency reserves away from U.S. dollars. Such a shift would chip away at what has been a substantial source of dollar-buying in recent years.

I dare say that the Wall Street Journal got it wrong this time.   While it certainly might be technically true that the immediate driver of the dollar’s decline is ” is low interest rates in the U.S. compared with higher and rising rates abroad,” that is only a symptom of the ultimate cause of the dollar’s decline.  The bigger picture can be summed up in two words: quantitative easing.  Obama’s Federal Reserve is creating money out of thin air.  And with more dollars chasing the same amount (and actually fewer) finite goods and services, the value of each dollar devalues. 

A week is a long time in Obama’s God damn America.  A fool-in-chief can do a lot of damage in a week:

APRIL 29, 2011
Dollar Skids to New Three-Year Lows
By JAVIER DAVID

NEW YORK—Investors wasted no time in sending the dollar to new three-year lows after the Federal Reserve gave them little reason to support it.

Weak U.S. growth and unemployment data quickened the dollar’s fall. Initial employment claims jumped back above the 400,000 level in the latest week. Meanwhile, gross domestic product data showed that economic growth slowed sharply in the first quarter, led by surging food and energy costs that sent a key gauge of inflation, the personal consumption expenditures (PCE) price index, soaring to its highest level in nearly three years.

Late Thursday, the euro was at $1.4821 from $1.4794 late Wednesday. The dollar traded at ¥81.54 from ¥82.04, while the euro was at ¥120.85 from ¥121.37. The U.K. pound bought $1.6640 from $1.6636. The dollar fetched 0.8733 Swiss franc from 0.8738 franc, plunging to a new record low.

The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 73.12 from 73.519, its lowest level since July 2008.

Has Obama made our economy better?  Really?  You’ve been watching and reading mainstream media propagandist lies, haven’t you?  Here’s the reality: our dollar situation is every bit as bad now as it was when the terrible economic implosion of 2008 hit us.  That giant sucking sound you hear all around you is the value and purchasing power of your dollar sinking into the abyss.

Here’s another major economic indicator going right down the toilet:

Home price gains since spring 2009 vanish
The Standard & Poor’s/Case-Shiller index for 20 major U.S. cities in February comes close to its previous bottom reached in April 2009.
By Alejandro Lazo, Los Angeles Times
 April 26, 2011, 5:06 p.m.

The home price gains made after the housing market bottomed in spring 2009 have vanished, with 10 cities posting fresh lows in February, according to a closely watched index that tracks home prices in America’s biggest metropolitan areas.

The Standard & Poor’s/Case-Shiller index for 20 major U.S. cities, released Tuesday, came within a hair of its previous bottom hit in April 2009. The renewed drop in home prices indicates the nation’s housing woes continue despite a recovery in the broader economy.

“There is very little, if any, good news about housing. Prices continue to weaken, while trends in sales and construction are disappointing,” said David M. Blitzer, chairman of the index committee at Standard & Poor’s.

[…]

Foreclosures remain a significant part of the market and probably will remain so for the foreseeable future as borrowers continue to fall behind on their mortgage payments.

Patrick Newport, U.S. economist for consultancy IHS Global Insight, wrote in a note Tuesday that the decline in the index and drops in other home price measures — specifically a monthly index produced by the Federal Housing Finance Agency, which has seen steady declines in recent months — indicate that the housing slump is once again widespread.

The federal agency’s index’s “recent decline indicates that the vicious cycle in which falling prices lead to more foreclosures which lead to even lower housing prices, continues to play a role in keeping housing on the mat,” Newport wrote.

The Case-Shiller index has fallen to nearly the same level it was in April 2009, the last time it bottomed, evaporating the gains made last year after a popular tax credit for buyers fueled sales nationally. Experts predict prices will continue to fall this year, pushing past their previous lows into a much-feared double dip.

The only thing propping up the economy under Obama’s morally and fiscally idiotic policies is QE2.  Banks and major businesses are not being allowed to fail (it’s all too big too fail in an increasingly fascist system in which the government dominates the banking and corporate spheres).  Right now, the system Obama has only made more broken is being kept afloat in cash being created out of thin air.  The last time quantitative easing ended, the DOW immediately lost 16% of its value in two weeks.  And QE2 is set to end in June.

This means QE3, and then of course QE4.  Because “QE” means “Quack Economics” far more than it should mean anything else.

The following video WAS a fictional account warning us of what could happen.  But it is about to become news before history confirms it:

And do I really have to say anything about gas prices?  Gas was $1.79 a gallon when Obama took office; it is now $3.91 and going up every single day.  That is an increase of more than 118%.  How’s that hope n’ change workin’  out for ya?

Should I mention corn?  Field corn has increased 300% (from $2 a bushel in 2009 to $6 a bushel now) under Obama’s dreadful godawful policies

Wheat prices have more than doubled.  These are basic staples used in everything. 

Food costs more than at any time since 1974.  And it’s going to get much, much worse.  Prices for food and meat are going to soar in the coming days.

Liberals say they care about the poor.  But they don’t give a damn about the poor.  All Democrats want is to “fundamentally transform” America into a socialistic system where they can maintain power forever.

The other thing to say about the above is that Gerald Celente predicted in 2008 that food riots and revolution would overtake America by 2012.  I pointed out in a recent article that what he said is exactly coming to pass both here and around the most flammable region on earth.

And all the unrest you’re seeing around you is simply the Cloward and Piven strategy for bringing about the downfall of the United States of America finally coming to pass exactly like the left wants, and exactly like people like me were talking about for the last two years.

Nobody’s really telling you about what’s happening or about what’s coming.  And that’s mostly because nobody wants to hear about it.

When Adolf Hitler seized power (he never took more than 37% of the vote, but that doesn’t stop a big government tyrant from seizing total power), he began to ruthlessly suppress dissent.  Today, the Democrat Party has pushed on attempt to impose one euphamistically-named “Fairness Doctrone” after another to shut down competing voices, even as Nancy Pelosi now demands a system in which “elections shouldn’t matter so much” in the aftermath of the one that drove her from power).

I think of one journalist named Stephen Laurent who was impriosoned for trying to tell the truth about Hitler.  He wrote:

“I am writing this from cell 24. Outside a new Germany is being created. Many millions are rejoicing. Hitler is promising everyone precisely what they want. I think when they wake to their sobering senses, they will find they have been led by the nose and duped by lies.”

And that is where America is heading.  Only there will be no America to rebuild America the way the United States of America rebuilt Germany in the aftermath of Germany reaping its whirlwind after sowing the wind.  Obama himself will have seen to that.

The funniest thing about this – if anything about America turning into a socialist banana republic is “funny” – is that it will be the left who so rabidly despise the Word of God (otherwise known as the Holy Bible) who will bring about it’s ultimate fulfillment.

The beast is coming.  He will be a one-world global leader who will take over in the catastrophic aftermath of false messiahs like Barack Hussein Obama.  He will be the personification of the United Nations and globalism and a world without borders and all the other total idiocy the left has been jabbering about for decades.  He will represent the sum total of everything the liberals have ever yearned for.

The secular humanist left has said that if they could just take over, they would create a humanist Utopia.  God is going to give them their chance in the Tribulation with the big government Utopia of the Antichrist.

And in just seven years he will have brought a literal hell on earth.

It will be the left – it will be the people who most hate and despise and mock the Bible – that brings about all of the end times prophecies of the very Bible they so ridicule.

Barack Obama is an example of the sneering tone of the left toward the Word of God:

Which passages of Scripture should guide our public policy? Should we go with Leviticus, which suggests slavery is ok and that eating shellfish is abomination? How about Deuteronomy, which suggests stoning your child if he strays from the faith? Or should we just stick to the Sermon on the Mount – a passage that is so radical that it’s doubtful that our own Defense Department would survive its application? So before we get carried away, let’s read our Bibles. Folks haven’t been reading their Bibles.

But I have been reading my Bible, President Obama.  And I’m seeing more and more reasons to believe it and accept it as God’s Word about a time which is now at hand.

I see the dollar devaluing to nothing; I see the cost of food skyrocketing.  And I consider the words of the book of Revelation:

He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name” (Revelation 13:16-17)

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Greek Crisis Coming To Your Neighborhood Soon

February 21, 2010

Let me summarize what is going on: the Western world (and most definitely the United States) is playing the subprime loan game.  We’re not talking about a few schmucks; we’re talking about the whole country.

We’re borrowing huge sums of money at a current rate of about 3% interest.  But as the lenders start getting nervous, they’re going to want to increase that interest.  We are in plenty of trouble paying these trillions of dollars back at 3% – but what happens if the interest increases to 5% or 7% as it could very quickly do?  The costs of paying these loans would rise to catastrophic levels, and we could find ourselves literally bankrupt overnight.

That’s what happened to Greece.  And it’s what’s ultimately going to happen to the USA.

A Greek crisis is coming to America
By Niall Ferguson
Published: February 10 2010 20:15

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

There is of course a distinctive feature to the eurozone crisis.  Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.

That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.

Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect.

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.

The writer is a contributing editor of the FT and author of ‘The Ascent of Money: A Financial History of the World‘

The United States is on life support, and it won’t be long before the doctor turns off the machine and calls the time of death:

It is now mathematically impossible for the United States to repay its debts, even if every single penny was seized from every single man, woman, and child, from every single bank, and from every single business.

This is our future, assuming we can stave ff the fate of Greece:

“Within 12 years…the largest item in the federal budget will be interest payments on the national debt,” said former U.S. Comptroller General David Walker. “[They are] payments for which we get nothing.”

Economic forecasters say future generations of Americans could have a substantially lower standard of living than their predecessors’ for the first time in the country’s history if the debt is not brought under control.

Greece’s budget deficit-to-GDP is an astonishing 12.7%.  And that massive unsustainable spending is the thing that is killing them.  But we shouldn’t laugh: ours is at 11.2%, according to Goldman Sachs:

We now expect the US budget deficit to rise to $1.64 trillion (11.2% of GDP) in fiscal year (FY) 2010 and to total $10.8 trillion (trn) over the next ten years. This profile is modestly above our early October forecast and well above the administration’s figures.

Even so, near-term risks lie to the side of a bigger deficit. Tax receipts have started the year in a deep hole and could continue to fall short. And if the economy struggles as the current dose of fiscal stimulus wears off, as we expect, then policymakers are apt to adopt more stimulus than we have assumed.

The United States is sixth on the list of countries with the highest ratios of budget deficit to GDP.  And the other countries are PIIGS (Portugal, Ireland, Italy, Greece, and Spain).

About the only thing separating us from the fate of Greece right now is the fact that we can keep printing our own currency until we plunge right off the economic cliff.

One morning we’re going to wake up and learn that our currency isn’t worth the paper it’s printed on.