Wednesday, August 26, 2009

What I'm Reading

"Ultimate Crisis Still Coming"
Analyst Marc Faber believes that the ongoing rally is the result of excess liquidity pumped into the economy by central banks. He predicts a year to 18 months of market rally followed by a "ultimate" crisis that will "clean" the system. He advocates firing half of global government workers as one radical solution.

"If you pump money into the system and you create large fiscal deficits, you create volatility," Faber, author of the Gloom, Boom and Doom Report, told CNBC in remarks reported on its website.

"We've seen an intermediate low in March, we'll rally for a year or so or maybe 18 months -- the ultimate crisis will happen much later, and the ultimate crisis would clean the system," he added.

Faber, who did not forecast a precise time for that crisis, told CNBC that firing half the government workers in the world would be one way of dealing with the crisis.

"If you shift government activity to the private sector the economy becomes more dynamic," Faber said.

More Bank Failures Coming?
An analyst by the name of Richard Bove at Rochdale Securities (whom CNBC identifies as a "prominent banking analyst") is predicting a possible 150 to 200 further bank failures in the U.S. 81 banks have already failed in 2009.

Doubts About Dollar Continue
There is nothing new in this article. It simple summarizes why many doubt the stability and value of the dollar. It does mention that Pimco and Berkshire Hathaway Chairman Warren Buffet have come out as high-profile critics of the ballooning debt and how it could lead to negative outcomes for the U.S. dollar. I'm mostly interested in this article because it caps a week where we've seen a ton of articles from the financial media on the value of the dollar, but none with any real news or any "meat" to them. I find that rather curious but I can't explain it.

Senator Warns of Inflaton
Senator Chuck Grassley (R-Iowa) is warning about the possibility of 1980s style inflation, which hit 13.5%. I think its quite possible (maybe even likely) that his prediction will come true. In fact, he might low-balling it a bit at 13.5%. However, I think his public statements are a bad thing, a very bad thing. Grassley doesn't really offer anything new in his analysis and theres nothing in his background that makes him particularly competent to make such a prediction. What we're seeing is the further politicization of fiscal policy and the threat of inflation. When things get politicized, they get emotional and they get polarized and it makes it that much harder to get some actual, positive change for the better since everything becomes part of a political battle between personalities.

Well, thats all for now. Stay tuned for more ...

No comments:

Post a Comment