Is It Possible to Get By?

Not so cherry post on the way cheap credit has become almost necessary to make ends meet for the “average” American family.  Not so clear how we’re headed to recovery at this rate.  As the author notes:

Because we outsourced our jobs, incomes fell. Because incomes fell and savers were punished (thanks to abysmal returns on savings rates) we pulled future demand forward by splurging on credit. Because we splurged on credit, prices in every asset under the sun rose in value. Because prices rose while incomes fell, we had to use more credit to cover our costs, which in turn meant taking on more debt (a net drag on incomes).

And on and on.

Read Full Post »

Greek Default

What’s happening to Greece is a glimpse of America’s future: years of artificial plenty followed, quite dramatically, by unrest, massive cutbacks in services, and a loss of power and prestige.  This, all due to excessive government spending and a lack of economic productivity.  To a lesser extent, it’s also the story of how foreign institutions, international bankers, and foreign governments will control a people’s destiny if those people are too indebted to them.

Read Full Post »

Obamanomics: I Cut, You Lose

We’ve all heard of, “I cut, you choose.” It’s a game theoretic principle, well known to children, that basically says if someone is dividing the pie, the other person should get to pick which slice he gets.  That way the cutter has an incentive to divide it as evenly as possible.  Well, with Obama, it’s all about redividing the pie.  That great big pie that represents our collective economic wealth.  For him, it’s a pie fit for redivision, where 90% of the wealth is supposedly in 10% of the hands.  If that’s the case–and this Marxist folk wisdom defined Obama’s entire adult life–then the problem of governance is relatively easy:  you simply need to organize the aggreived majority, demonize the wealthy minority, and, in Obama’s words, take from the “money people” in order to ”spread the wealth.”

He spent most of his life thinking about how to redistribute wealth from the wealthy to the less wealthy through various schemes like redistributionist taxation, nationalized health care, community organizing, affirmative action, increased government sector, unionization, minority set-asides and the like.  But now he’s in the awkward position of having to come up with policies designed to replace and create wealth.  Massive wealth has been lost in this recession, both in housing, bank balance sheets, government revenues, and all the rest.  It threatens to remain this way for a long time.

Obama did not want to be president at this moment, any more than George H.W. Bush wanted to be a post-cold-war president.  Obama doesn’t know what to do, as evidenced by the large proportion of stimulus dollars going to “jobs” like government sector jobs at the state and local level, such as clerks, teachers, etc.  The minor exception to this is the “flying cars” concept; you know, so-called green jobs.  Truthfully, no one really thinks this will work, and, if it does, it won’t create all that many jobs, since the unemployed in construction, service sector, sales, office workers and others with industry-specific skill sets can’t easily move into manufacturing nifty flying cars and solar plants all that easily.

Further, the pretension that Obama can pick the next big growth sector is kind of quaint.  This kind of industrial policy–as opposed to broad-based monetary and trade policy–has been a major failure where it’s been tried, as evidenced by the overinvestment of the Japanese Ministry of Trade in HDTV 25 years agoand other mercantalist schemes, such as Brazil’s inefficient investments in airplane and auto manufacturing. He probably knows nothing about the sorry history of public-private investment partnerships.

He does not accept, does not benefit from, and does not realize that the best thing he can do for the economy is to restore confidence in government finances, shrink the deficit, avoid radical moves, and restore sound financial regulation to prevent market blowups, while channeling investment generically into productive sectors (as opposed to the prevailing trend of leveraged gambling on currency trades and what not). In other words, most of what he needs to do is less of everything involving government intervention, and it’s against his nature to do so.

Read Full Post »

The Mortgage Reset Myth

There is a combination of worry and hope about the coming wave of mortgage resets.  First came the subprime.  Next will be the Alt-As and Option ARMs.  And then, in 2013 or so, it appears that we may be out of the woods.  Housing will stabilize.  Rates will be set. Foreclosures will level off and decline.

Will they?  ARM resets lock in a particular rate and then float.  They’re a good mortgage product for people that expect rising income, or expect to sell their house in a few years, or have good credit and equity to allow conversion to a 30 year fixed at the reset point.  And low rates–caused in part by the 2008-2009 flight to treasuries and deflation–have made resets a boon to homeowners that led (for now) lower rates.  But times are changing.  Banks are stingier with their credit, and even those with ARMs (especially Alt-A ARMs) are being buffeted by unemployment, reduced assets, the inability to refinance their homes based on their nonexistent equity, and all the other tales of woe unleashed by the recession.

The reset is not a one-time event.  It’s periodic.  It means that the ARMs will now be floating based on the LIBOR (i.e., an overnight rate that is pretty much the lowest market rate) plus some marginal rate.  LIBOR plus 2-3%, let’s say.  But the LIBOR floats, as will the new floating rates.  As government spending goes up, defaults of various loans continue apace, and inflation risk gets priced into borrowing, interest rates across the board will rise.  This rising cost of borrowing will be reflected in both the floating rates and the available 30 year fixed rates in the years ahead.  And these rates by design adjust periodically, either every six months, once a year, or monthly (according to The Handbook of Mortgage Backed Securities).

Far from being relieved of danger after the “Alt-A reset bomb,” the reset bomb will be a continuous threat to housing, made more permanent by the inability of upside down ARM holders to refinance.  Every year, as interest rates rise, their monthly payments will go up.  Borrowers will get the double whammy from inflation that the old-fashioned fixed rate provided protection against.  The ARM, which made a great deal of sense in the go go years of the mid 2000s, may become a permanent albatross on homeowners, and, in turn, a continued source of new insolvency, reduced consumer demand, and declining wealth nationwide.

The rough ride is only beginning, I fear, and the loose money policies of the Federal Reserve and the Federal Government are only going to make things worse by pushing up interest rates and inflation.  Those who did the historically responsible thing by buying a home in the last ten years will get whacked by the combination of inflation, rising interest rates, and wages that lag behind this wealth-destroying pincer movement.

Read Full Post »

Famous Last Words

“Even God Himself could not sink the Titanic.”

Tim Geithner must think we’re all a bunch of idiots. The Federal Reserve is buying 80% of treasuries, the debt has exploded, and our unfunded obligations going forward are north of $65 Trillion (i.e., 1X our entire national wealth), and he reassures us that America will never lose its AAA rating?!?  This, by the way, is this lightweight’s typical mode of reasoning:  assertion without evidence.  He’s not even doing a good job of buying time for the Ponzi Schemers whom he has served his entire career.

We are in major trouble.  Mainstream Wall Street figures are talking about heading to the hills, buying survival farms, and the like.  The debt explosion makes this “recession” different from its predecessors. We are in the middle of a great reckoning, and Tim Geithner wants us to forget this fact and continue business as usual which he pursued at the New York Fed.  But this too will end thanks to the globalism we were told would solve all of our problems.  Our international counterparties–especially the Chinese–are our government’s lifeline.  The Chinese are a creditor, and like the British who put 19th Century Egypt into receivership, they will soon decide what we do, what we spend, how much we can buy or sell, and all sorts of other incidents of sovereignty. And even that probably won’t work in the end, because the Chinese, like us, are also a credit-addicted behemoth, tempest-tossed by the instability of a worldwide fiat currency meltdown.

Read Full Post »

Government Of, By, and For Goldman Sachs

Not only did the bailout of AIG help stem losses at Goldman Sachs, but it let them avoid all housing related losses from its huge MBS exposure by subsidizing their credit default swaps with AIG–in effect, in surance policies–dollar for dollar.  Not a penny in losses.  And, worse, Tim Geithner, working then as NY Fed Chairman in late 2008, colluded with them to hide this scandalous situation from the public:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”

Isn’t this amazing?  This is the worst kind of crony capitalism.  Mexico and Indonesia could do no worse.  What free market principle says a big risk-taking investment bank can never book a loss?  What principle says this institution, which never was FDIC insured, was not a money market, and was known for its knee-deep exposure to housing, could avoid all housing-related losses as millions of Americans struggle to pay down their upside down housing notes or get walloped with the credit devastation of a foreclosure or bankruptcy?

The only thing saving Wall Street from a pitchfork rebellion by the middle and lower classes is the byzantine confusion created by “financial engineering.”  The principle here is no principle at all:  the primitive idea that connected super-big and super-rich firms and people can fleece us, pass their losses onto the public, and confuse and bribe our politicians into doing whatever they want.

Goldman Sachs is a dangerous, anti-democratic and anti-free market behemoth.  It serves one purpose:  enriching its senior management at the expense of the public, the government, and even its own shareholders.  And Tim Geithner is a weak-willed and mealy-mouthed moron, whom it should be increasingly obvious was suggested as treasury secretary by the powers that be because he was a useful idiot and strawman who would do Wall Street’s bidding at the expense of the general public.

Goldman Sachs should be liquidated, the personal assets of each of its managers and directors for the last ten years clawed back into a fund, and this sum should be distributed pro rata to every American taxpayer.  Unjust you say?  Well, no more unjust than the crony capitalist principle that lets them do this in reverse.

Read Full Post »

Fraud on the Market

Interesting story on Goldman Sachs.  It basically says that they were shorting CDOs (collateralized debt obligations that rebundle poorly rated MBS (mortgage backed securities) tranches) and taking bets that housing would fall while still pumping ordinary MBS and CDO assets to ordinary investors.

This company is too big, too powerful, and too connected for our own good.   Obama, empty suit that he is, would rather toy around with GITMO and Professor Gates than address this thornier problem.  Perhaps we can have a class action lawsuit with the class made up of every homeowner who lost money on a housing sale in the last 12 months.  We can add Ben Bernanke as a defendant too.  That could be quite a judgment!  Goldman would probably lose 10% year over year.

Read Full Post »

Obama’s Right on Jobs and the Deficit

There are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other. This is a false choice.

So says Obama, this week, with the suggestion of throwing around remaining TARP funds on such ill conceived projects as “cash for caulkers” and other give-aways. In a way he’s right, but not the way he thinks. Obama is still committed to the Keynesian idea that the government must make up for slack demand and that we must “spend our way out of the recession.” Missing is any appreciation for the need of deleveraging the massive debt that has accumulated first in housing and now to the federal reserve as a result of the TARP transfer of mortgage-backed-securities to the Fed’s balance sheet.

One of the market’s biggest concerns is the absence of available credit, the weak dollar, and the growing fiscal sickness of the American government. All would be improved if Obama were to use this unspent money immediately to reduce the deficit or to shore up the FDIC or to engage in some other prudent, unsexy, and long-term matter. But he’s constitutionally incapable of doing so because, in spite of his alleged reluctance to have the government overly involved in the economy, he has not yet resisted a temptation to tinker, whether in autos, housing, or healthcare. He clearly loves doing this, views it as a way to reward the right kinds of people and his friends, and the fact that a coterie of economists say it’s the best policy is welcome cover. Of course, the numbers don’t help his case or that of these economists. The huge stimulus of earlier this year came and went, and unemployment is still 10% or more. The Japanese tried various boondoggle projects in the 90s without effect. None of these approaches is working, because government cannot create wealth or jobs; every dollar it spends is siphoned off the private sector through either taxes or deficit spending. But Obama is only interested in the economy as a secondary matter; chiefly, he’s interested in power and rearranging the order of society, and the government’s new role as “employer in chief” will give it unprecedented power to do so.

Read Full Post »

Government Debt: It’s Getting Worse

Obama and his supporters are fond of blaming George Bush and the deficit spending of 2002-2008 on our  government’s various fiscal problems.  As Obama put it, “”Number one, we inherited a $1.3 trillion deficit. … That wasn’t me.”  This is that trademark Obama straight-talk we’ve come to expect. It’s a false alibi that has the additional demerit of making the President appear remarkably weak and incapable of leadership.

Bush truly did a lot of deficit spending, as much as four hundred billion per year in 2008.  But notice the chart above.  This spending was dwarfed by the total scale of government spending in any given year and the high receipts (i.e., taxes) raised compared to deficit spending.  Now look at 2009, year of Obama and the major stimulus coupled with the continuation of Bush’s half-spent TARP funds.  The budget appears to be half deficit spending.  And the deficit is an order of magnitude larger than it has been in previous years, nearly $2,000,000,000,000.  The government is not taking money in and spending like it always did, but instead is borrowing on a heroic scale to maintain an unrealistic scale of legacy spending and unworthy causes like propping up GM and financing broke state and municipal governments.

This level of spending is dangerous and unsustainable. Judging by Gold’s recent spike to $1,190/ounce, it appears people interested in maintaining their wealth are starting to realize what’s going on with out devalued currency.

Read Full Post »

Round and Round

I’m in a bit of a blog rut. The same news basically keeps repeating itself: Obama’s abominable healthcare bill, our massive debt, our ailing economy, our lack-of-strategy or will or purpose in Afghanistan, and the general and increasing weakness of the country under Obama. What else is there to say about the latest behemoth healthcare bill. It’s an atrocity, and let’s hope it fails, but I have no particular ability to handicap its likelihood of passage or not.

As for the economy, the situation is bad and Obama is making it worse by running up huge deficits. Friends from extremely normal backgrounds–i.e., they weren’t reading Paladin Press books in college like I was–are talking about stockpiling guns, survival retreats, and general doom and gloom. These are guys that walk lon Wall Street and the Chicago commodities exchange, not habitual survivalist oriented nut jobs like yours truly.

Times have been worse of course. And God has his own mysterious unfolding plan in store for us individually and collectively. But I hate to write about the same things in the same way over and over again. I’m not quitting the blog. It’s still fun and helps me collect and clarify my thoughts. Something interesting and new should be on the horizon before long. But for now I feel great weariness.

Read Full Post »

“Green Shoots” Meet Reality

I thought this piece over at Seeking Alpha succinctly described why the latest equities bubble may just be another false alarm, like the equities run up and run down from January to May of this year:

Although there were a number of published models out there well before the economic crisis of 2008 showing why it was inevitable, I have not seen a single model showing how this vaunted economic recovery is supposed to take place considering the present state of consumer and government debt. The crisis was caused by a credit (not real estate) bubble, which has not in any way been realistically addressed. The stimulus package and tax breaks have merely extended consumer credit further by shifting more of the new debt to the U.S. government. There seems to be no realistic plan in place for even stabilizing the accrual of this debt let alone paying it down.

To begin to pay down consumer and government debt the U.S. would have to enter another cycle of sustained economic expansion (including a huge increase in exports to overcome the trade deficit) so consumers and corporations could shoulder substantial tax increases.

Such an expansion of the U.S. economy is no longer possible given world market competition. America cannot be competitive on the world market because there are not enough Americans employed making things. Most Chinese workers, for instance, are directly engaged in production whereas only a small percentage of U.S. workers are. The vast majority of U.S. workers are employed in “services,” which mostly involves moving stuff or money around; some even, like most of the so-called financial advisers, are still simply professionally engaged in the Willy Loman vocation of hustling themselves. Arthur Miller’s character in “Death of a Salesman,” may well metaphorically represent the state of the country today.

Read Full Post »

Are Social and Political Issues Distinct?

It may be thought that in these hard economic times, the economy will dominate the next election. This is probably true.  But it is a mistake to view social and economic issues as distinct categories.  In particular, issues like affirmative action, crime, and immigration may become more important to voters during economic hard times.

Welfare, affirmative action, crime, and social issues were important factors in the success of Reagan Republicanism twenty years ago. Affirmative action gains special salience during hard economic times and was used to great effect int he ’82 and ’90 recessions.  While affirmative action hiring policies may be annoying, limits on promotions and selective firings informed by racial preferences will sting more and divide the white working class even further from the Democratic coalition than these voters’ economic hard times alone would suggest.

The consensus among Republicans and Democrats alike has been not to make too much of a fuss about immigration and affirmative action.   Under Bush, conservatism was supposed to be “compassionate,” which meant policies indifferent to the native born population and hostile to the older American principles of thrift and limited government.  Everyone was so busy making money and flipping houses, it seemed petty to make too big of a deal about government services for illegal aliens or the quotas that prevailed in public sector and corporate hiring.  But as unemployment approaches 10%, the real swing voters–the white working classes–are realizing that these policies involve picking winners and losers in zero sum hiring and firing games.  At the same time, cigarette taxes and symbolic displays, such as Obama’s siding against law enforcement in favor of an obstreporous black colleague, remind these voters that Obama and the Democrats have less and less use for them and don’t identify with their values and interests.

These hard times create many opportunities for conservative politics.  For starters, spendthrift that Bush was, he had respect for private property and was substantially less inclined to expand the government’s reach into private life than Obama.  This difference would have been hard to fathom just a few years ago, but the Obama stimulus, health care, and moronic programs like “cash for clunkers” stand in sharp relief to Bush’s general tone.  Second, the argument that there are “jobs Americans won’t do” and that “diverse workplaces are important” will fall on deaf ears of whites who are out of work or deeply upside down many months into Obama’s administration.  Indeed, these cliches will be treated as insults and reinforce the suspicion that Obama does not mean to represent all Americans equally.

Republicans have long been afraid to make these arguments.  No one likes to be called racist and get disinvited from cocktail parties.  But voters are making these arguments for them:  on blogs, in private conversations, on the comment boards of newspapers, in anonymous posters, and on the insides of bathroom stalls.  The Republicans can either tie this rumbling into a coherent politics of fairness, preserving national identity, and sound economic policy, or they can be called racist all the same, while doing nothing to stand up towards the racist and socialist policies of the Democratic Party.

Read Full Post »

Straight Up Socialism

Obama laughed at the suggestion that he was a socialist during the campaign. But the scale of his spending, his intrusion in the private economy, and his disregard for traditional freemarket principles is breathtaking. The latest is a “compensation czar” who will oversee the pay of the many companies the government has subsidized. Pretty soon, I think we’ll all end up on a GS schedule.

This, of course, is the biggest threat of government handouts: in addition to the government picking winners and losers in a way totally inappropriate to a free market system under the rule of law, the principle of independence of private companies and their business decisions is completely undermined. It’s the kind of “help” that smothers the recipient and creates systemwide degradation of the “animal spirits” and cold-hearted market logic on which the whole economy depends.

The latest news reads like something out of Atlas Shrugged:

Administration: Rein in pay across private sector
Obama administration: Executive pay needs curbs, better management, across private sector

In addition, Obama’s likely instincts–cutting salaries–is the wrong one, and he’d know this if he paid attention at the many law and economics lectures that were available while he was at the University of Chicago Law School. I wrote about it here. Salaries are the long-term incentive for corporate managemnet, while options and bonuses of one kind or another are the shorter term regime. The market is already engaging in this correction, though, and, unlike Obama, it has its own money in the game.

Read Full Post »

The Fickle Public

Foreign creditors are getting pretty concerned about the massive dollar devaluation that Obama’s spendy ways entail. Even the Financial Times is talking about the US losing its AAA rating. (Of course, since all of our government debts are dollar denominated, I think this may only be a de facto condition; the debts will get paid with devalued dollars is all.) Nonetheless, tax increases appear inevitable, particularly if Obama wants to expand entitlements to include health care.

Ace notes that this is not what marginal Obama supporters bargained for:

I had thought that Obama’s speech where he reluctantly and sadly tells the middle class he might have to kinda break his campaign pledge and raise their taxes — which will surely be hailed as “The Greatest Speech on Increasing Income and Payroll Taxes Since Lincoln’s Gettysburg Budget Reconciliation Speech” — would be put off, coincidentally enough, to just after Obama’s second inauguration. But now, with his ability to borrow until that point now threatened, he may have to make it sooner.

Which of course raises the Big Question which no one in the media will ask him. He will explain, sadly, that Bush’s recession and “runaway deficits” were/are much worse than he thought, and therefore he cannot both honor his promises to spend like the wind and his promise not to increase taxes on the middle class. (Actually the middle and upper middle class and lower upper class too, as he promised that no one making under $250,000 per year would see an additional “dime” in taxes.) And therefore, with greatest reluctance, you understand, he’ll have to raise taxes.

And he’ll say he has a mandate for that, because that’s what the people voted for.

But they didn’t. They voted, to the extent they voted for any specific plan, for the idea that Obama would spend more, but based on the predicate that he would not under any circumstances raise taxes on anyone except the top 5%. He had a mandate for A, but only if Not B. Well, if that “but only if” part of it fails, he has no mandate any longer for A, either.

The public gave him to mandate to spend, so long as he could do so without raising taxes; if he wants to spend and raise the middle class’ taxes, he’ll need an actual mandate for that proposition, won’t he? As in: Put your spending plans on hold, and run for reelection on the platform of raising taxes to the hilt. And see if America votes for that Hope and Change.

Read Full Post »

Some Observations

Interesting piece by Rich Lowry on how, for Obama, America’s history does not matter, and he does not conceive of himself as a defender of America’s reputation.  For him, it’s practically year zero.  To me this has as much to do with his narcissism as his philosophy. It’s all about him! And if he wasn’t around when America did something–such as the very morally defensible, if disastrous, Bay of Pigs invasion–then it should not matter.

On a related matter, Buchanan notes that the Achilles Heel of Democrats has long been their perceived lack of patriotism, and Obama’s recent road show will not help.  I think this is right, though I also agree (and wrote earlier this week) that America may have changed so much that the old Real America may not be numerous enough to slow him down.  Obama has to show himself a champion of America as a vital, historical entity, not simply as a partisan for a grab-bag of liberal principles.  Bush too got burned on this when he pushed amnesty as aggressively as he did.  I think this will be difficult for Obama, though, because he has almost no experience outside of Chicago and the strange locale of Hawaii.  He is a bit of a stranger to his country, in particular to the values and way of life in its interior. He also lacks affection for much of is past, which, though perhaps understandable, does not make him well suited for sustaining the affection of a great many Americans.

I’m no great fan of torture, particularly in the way it was couched in extreme legalism under the Bush administration.  I feel an aggressive application of the pardon power is the better solution in war time, rather than having such terrible acts done deliberately, with the patina of legality, and the consequent degradation of lawmakers and the law.  But I think it’s profoundly dishonest for Obama and others to say constantly that there is no choice between security and “our values.”  There are choices, and they need to be made and defended honestly based on what they entail.   Obama’s days of voting “present” are over.  I confess, I don’t fully understand the critics’ passion on this issue.  There are times when torture might work in saving Americans from a major disaster; an honest opponent of torture–like an honest defender of civil rights–would acknowledge that there are times when we should suffer in order to follow through on this moral commitment, though I think here the scale of harm is so much greater than ordinary crime that it’s a much closer moral question.  War time, unlike ordinary policing, is a different realm, and this is something the lawyer Obama and his numerous lawyer advisers fail to appreciate.  There is little chance any American citizen would be “tortured.”  The victims are all foreigners of one kind or another, in fact all high ranking al Qaeda members.   So long as “rough interrogations” are directed outward, the harm is confined to strange enemies, not potentially innocent accused Americans.  Further, this talk of “our values” is a little results-oriented and astorical  Our “values” did not prevent some pretty rough treatment of the Indians or Japanese.  Waterboarding was common in Vietnam.  George Washington had military commissions, as did FDR.  So “our values” apparently means “today’s liberal values” for most who invoke this question-begging phrase.  I think Obama also will find out that the various perma-bureaucracies in DC, particularly the CIA, have ways of getting even to perceived disrespect, as evidenced this week by the leakage of memos on the effectiveness of torture in preventing a 9-11 style attack on L.A.

Lucian Reed’s photographic essay of combat in Iraq, particularly with the audio of actual combat, is haunting and powerful.  I found him at the Battle Space photography portal. It’s funny how much the media has dropped Iraq; there’s still a war going on, and those of us in military families can’t afford to “tune out.”

Closer to home, a scathing portrait of Tim Geithner.

The economy still looks pretty grim, and the “bear market rally” of the last few months has been a very low volume play thing of day traders and perpetual bulls, as best I can tell.  One area that is rallying, in spite of drops in commodity prices, is ammunition. While gun prices have dropped some since January, ammo’s getting impossible to find, and price has tripled from 2-3 years ago.  People who used to have a hundred rounds or so sitting around the house are, quite obviously, stockpiling.  This is Obama-inspired, mostly, but it’s also inspired by the general fear out there among the peasantry.  This is or course a smallish market with various impediments to entry and importation, and it’s subject to occasional panics like this one.  Then again, this may be “how it is” so long as a gun-grabber is in the White House.

As a “signs of the times,” perhaps fearful of the devalued dollar, China has assumed a much larger gold position in the last several years.

Read Full Post »