“Every individual has a responsibility to be informed, to know what is going on and to know the issues. As Samuel Adams once said, ‘Go out and start a brush fire.' And you can do that with one individual or many. You can become a teacher or a writer or help somebody in politics. But you can only start a brush fire for freedom if you feel confident that you understand the issues and really can defend liberty as being the best system for all of us.” ....US Rep. Ron Paul

Yet in the end, there can be no mistaking the central role played by excess consumption in defining America's current account problem:   With US imports fully 61% higher than exports (as of February 2005), the only conceivable way to correct the external deficit is by a reduction in consumption-driven imports.  For Asia, that spells serious trouble:   If you are a believer in the coming US current account adjustment, Asia's most important growth prop is about to meet its demise.  Lacking in domestic consumption, Asia's only hope may be nothing more than wishful thinking.


Invisible Hand

Most people probably believe that the major capital markets in the U.S. are basically true markets with, occasionally, maybe very occasionally, a little bit of rigging here and there. But evidence shows that the opposite is the case—the rigging is fundamental with a little bit of true markets here and there. MORE>>



Nearly 40 years ago, Federal Reserve chair Alan Greenspan wrote persuasively in favor of a gold monetary standard in an essay entitled Gold and Economic Freedom. In that essay he neatly summarized the fundamental problem with fiat currency in a few short sentences: “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value… Deficit spending is simply a scheme for the ‘hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” MORE>>

Dead Bull

In the event that you weren't aware of it, missed it, didn't see it, don't remember it or are consciously ignoring it, the bull market in U.S. common stocks is dead. Over. Kaput.

Five years after the turn of the millennium, Y2K still stands in the annals of history as the point that all three major U.S. indices - Dow, SPX and Nasdaq - hit their highs and then turned tail, marking the official beginning of the end of the Bull. Quickly came a dark and ugly period of crumbling and decay, with day after day of miserable market declines, right on through 9/11. It was not until almost a year later, in Fall of 2002 before the markets finally found support. MORE>>


Gold and Oil

As we will see, previous oil shocks were a perfect call for higher inflation figures and recession. Will this time be any different ? According to Alan Greenspan yes, he says that higher oil prices won't be much of a problem for the economy these days and inflation won't pop up as during the seventies. Well, energy experts such as Mathew Simmons and Colin Campbell do think otherwise. They make a powerful case for the end of cheap energy. The nasty consequence of a lack of cheap energy is the end of economic growth. Will we ever come out of a recession again for a sustained period of time? MORE>>


bear tracks

Blue Plate Special


Iran is winning the war. News regarding Iran continues to be omitted. Shortly Iran will have the military potential to interdict or control Middle East oil supplies at will. The political and economic cost of dealing with this issue has been deferred therefore it will be paid for at higher cost later. MORE>>

Silver Bear Cafe


"No one has the right to gamble with the welfare of the American people, neither the President, nor the Chairman of the FED, not the politicians, not the judges, not the bureaucrats. That is why the Republic has been given a Constitution. The Constitution denies power to the government to monetize its debt. As we have seen, this provision is the first line of defense to protect labor, as it acts to keep capital and jobs together and within the country's own borders.

The Constitution's monetary provisions have served this country well, and the unconstitutional monetary experiments conducted by the FED have served it badly. The latter were a series of unmitigated failures that have gone a long way to de-industrialize America, and threaten to drive the remaining capital and industrial jobs abroad. Open your eyes and see for yourself. God gave us eyes so that we may see." ....Antal E. Fekete


Question: Why has the Fed allowed a housing bubble to develop? Answer: Because they didn't have any choice. The past several years of low interest rates have allowed households to extract cash from inflated property via cash-out refis, home equity loans, and sales; and to use lower interest rates to reduce monthly mortgage payments and increase disposable income. These sources of cash and savings compensated for lost wages from unemployment or underemployment. Without low interest rates engineered by the Fed, the U.S. would have sunk into a deep recession. The housing bubble is an unintended consequence. As Hague points out, "The ability to borrow $1 million for a speculative home purchase with a monthly payment of approximately $3,500 versus, say, a cost of almost triple that five years ago paints a clear picture of how this whole thing started in the first place. How many real estate investors today would or could afford $9,000 per month for the same $1 million? I think the answer to that question is easy." MORE>>



Can you remember life before $100 sneakers and $5 coffee, when people actually lived on what they earned and still had a little something socked away for a rainy day?

"People moan and groan about why they can't make do," says Michelle Singletary, author of "Seven Money Mantras for a Richer Life." "But if you look at your lifestyle, there's almost always a way to trim [costs] and make do with less." MORE>>



When you think of a bubble in the 1920s, what comes to your mind?  We are willing to bet that it isn't the Florida real estate craze of 1925.  That's right, in the early 1920s, land prices in Florida began to rise as tourism was thriving and celebrities from around the world were spotted partying in and around Miami.  Add to that exponential population growth and the superficial, money-centered culture of the time, and housing prices in this new playground of the wealthy and famous were guaranteed to grow exponentially. MORE>>



Debt-based fiat money is the economic equivalent of heroin.

It has the same effect on personal, national, and global economies as heroin has on the human brain. Just like heroin removes the addict from interaction with other humans based on the common ground of everyday reality, debt money removes the financial decisions of individuals, organizations, and governments alike from the common ground of economic reality. MORE>>


THe Future is Calling
The average American citizen refuses to pay attention to civic affairs, contenting himself with a general growl at the tax rate, and the character and inefficiency of public officials. He seldom takes the trouble necessary to form the Government to suit his views. The truth is he has no cohesive or well-digested views, it being too much trouble to form them; therefore, some such organization as ours is essential MORE>>




Burning Money

Among the many sordid features of America's late, degenerate capitalism is a tendency to overpay corporate executives. Top business leaders have become like sports heroes without the talent. You need not have any real knowledge of the business you are getting into...or, as Bernie Ebbers demonstrated, any real knowledge about business of any sort. So immediately, you see, we are all perfectly qualified. MORE>>



Fat Cats

Suppose the Very Big Insurance Company sold millions of retirement policies to the workers of America. For a modest monthly premium, Very Big promised every policy holder a financially secure retirement. The Very Big Insurance Company gave each worker an individual contract and an annual statement of retirement benefits.
Unfortunately, Very Big's executives underestimated the cost of these benefits, and spent most of the money that had been entrusted to them. This went on for many years. Eventually, however, an auditor figured out that although Very Big had enough cash flow to cover current retirement policy benefits, it did not have enough income to cover future liabilities. The Very Big Insurance Company was headed for certain bankruptcy.



Train Wreck

If Rip Van Winkle had nodded off at the top of the bubble in early 2000 and then awoken today, only his outsized beard would be a tip-off that more than a night had passed. He'd be witness to a display of bullishness and bravado that's every bit as arrogant, though definitely not as ubiquitous. MORE>>




Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish. But you should hear what he's saying in private. Roach met select groups of fund managers downtown last week, including a group at Fidelity. His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.'' MORE>>



catbird's seat

There is an axiom in human relations that says there is always a third party motivator between two aggressive combatants. This axiom has proven itself true from the time of the Stone Age until today. The hidden third party motivator behind the Iraq and Afghanistan wars is Iran. In proper detective work, it always pays to follow the money trail and in political conflict you always try to determine who benefits the most.

Iran has had two major competitors removed from the world stage in the form of the Taliban and Saddam Hussein. Their removal was not at any cost to Iran and the Coalition of the Willing (Bullied?) took care of it for them. MORE>>





At the dawn of the 21st century, a global water crisis is looming. According to the United Nations, 1.3 billion people in the world today lack access to clean water while 2.5 billion do not have adequate sewage and sanitation. No less than 31 countries are considered to be in water stressed areas. Worldwide demand for water is doubling every 20 years, twice the rate of population growth. By the year 2025, demand for fresh water is expected to outstrip global supply by 56 percent. MORE>>

What is the relationship between Weimar Germany and Wall St. of the late 90s?   On the surface, what could be more different?  Stock market booms are the best of times while hyperinflation is a nightmare. MORE>>

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