A fascinating article by Ambrose Evans-Pritchard – Obama could kill fossil fuels overnight with a nuclear dash for thorium - looks at the idea of using thorium instead of uranium as fuel for nuclear power stations. Sounds like real breakthrough technology – if vested interests can get out of the way.
Some interesting figures have come out of the 2010 Q2 data published by the World Gold Council. Physical gold demand by weight rose 35%. But when expressed in dollar value, it rose a hefty 77%. This is good news for all those who expect the continuing devaluation of paper money, and who are hedging against such an eventuality by owning gold.
And as David Galland points out in Uncle Scam – today’s dollar is only worth 18 cents in 1971 terms, the year President Nixon closed the gold convertibility window.
Bond yields are tumbling, as investors seek “safe havens” for their cash. Trouble is, no country is sound enough to warrant investing in it – and those accepting rates of as low as 1.02% on 10 year Swiss bonds, and of 2.11% on German Bunds are in for a rude awakening down the track.
The desire to find “safety” is understandable enough, but to seek it in the debt of nations is foolhardy, and represents behaviour more like lemmings following each other over a cliff. Why? Because the levels of indebtedness and economic fundamentals in all developed nations does not support the idea that such bonds are “safe”.
Far from it. Investing in bonds is investing in government debt – the very same debt that is getting us all into trouble. The same debt that must be paid back by citizens of each respective country – either by taxation or the stealth tax of inflation.
If such countries and their citizens simply revolt and do not pay back their debts – then bond investors are left carrying the losses.
In my book, the very last place I’d be looking for “safety” is in government bonds. So don’t be a lemming. If you are really looking for safety, then you should be in gold - the only real money.
Ambrose Evans-Pritchard takes up the latest developments in: Fresh flight to Swiss franc as Europe’s bond strains return
Apparently “yes” – according to the latest leak of official documents by WikiLeaks – this time of a CIA memo.
As of writing this, gold is selling for US$1,241 per ounce – a bit of a surge since yesterday’s bad economic and housing news out of the USA. So the question arises … is now the best time to buy gold, or is it already too expensive?
Jeff Clark has the answer in: You’ll Buy Gold Now And Like It!
Ambrose Evans-Pritchard summarises the moves towards the financial crisis end game:
Hard-nosed Fed sends global markets reeling
Governments love fudging the numbers, especially when it comes to disclosing the actual size of the national debt. One way of discounting such a debt is to ignore what is termed “unfunded liabilities” – things like social security or pensions.
Well, the Institute of Economic Affairs has calculated the UK’s national debt – taking into account such unfunded liabilities – and come up with a total of £4.8 trillion (US$7.74 trillion), or £78,000 (US$121,000) for each and every person in the UK. That is a whopping 333% of the UK’s GDP!
It’s figures like these that underscore the severe economic situation we are really in – because if and when other countries calculate their national debt in the correct manner, I’m quite confident a similar bleak outlook will prevail.
In the current economic environment, it’s not the “next best thing” that is so important, but what NOT to do – as Doug Hornig reveals in his article: The 10 Biggest Mistakes Investors Must Avoid in The Coming Decade
The Middle East is in a constant state of military alert, and hardly a day goes by without some bigwig, somewhere, issuing an incendiary statement intended to fan the flames of conflict. And to make matters worse, ordinary people are subjected to a constant onslaught of propaganda – from all sides. But how much do we really know about that area?
Here’s a small quiz to test your own knowledge:
Q: What Middle East country has the most Jewish people outside of Israel?
A: Iran – with 25,000 Jewish citizens
Q. What Middle East leader donated money to a Jewish hospital, one not in Israel?
A: President Mahmoud Ahmadinejad of Iran
Q: Would you rather be a Palestinian living under Israeli occupation in Gaza, or a Jew living as a citizen in Iran?
A: Only you know the answer to that last question. But before answering it, I recommend you read this illuminating article by Mike Whitney, which attempts to set the record straight about our perceptions of the Middle East situation: Why Iran’s Jews Are Better Off Than Gaza’s Palestinians
Moody’s rating agency has warned that the USA and other developed countries face a critical moment – likely to be 2013 – when in the US, interest payments on debt will equal 14% of tax revenues. According to the agency this is the tipping point.
Once debt servicing reaches such a critical point it continues to rise, eating up more and more of the annual tax revenues. And this can only be made worse by anticipated interest rate rises into the future.
Given the dire warnings, and the all-too-obvious shocking fundamentals apparent to those who look closely, it’s going to be crunch time in more ways than one.
One thought occurs to me – amongst all this potential doom and gloom. This level of debt can bring down governments (and no doubt will), and the social dislocation can cause people to cross the mental threshold required to accept new ideas. So it’s quite possible that the debt crisis will represent an opportunity – and opportunity to move away from centralised state control, as people search for new answers to apparently intractable problems.
Of course, a different direction is also possible – that of moving towards an increasingly fascist form of governance. I see both scenarios as possible – even perhaps coexisting on the planet as a whole – but only the unfolding of actual events will reveal the exact nature of what is to come.
One thing is for sure. No amount of burying heads in sand and pretending nothing is wrong will prevent the day of reckoning.
