Free Republic

While it may look superficially similar to the recent implosions of such investment giants as Fannie Mae, Freddie Mac and Lehman, the takeover and bailout of AIG is quite different, and means that the market is entering the next and even more dangerous phase. What is driving the fall of AIG – and potential government losses that may far, far exceed the $85 billion bailout announced late on September 16th - is not mortgages or real estate (directly), but fears that AIG’s huge, global credit-default swap positions will unravel. The $62 trillion dollar credit derivatives market is 50 times the...

Texas Straight Talk - A weekly column The Do-Something Congress It has not been a good week for the Republic. It took quite a bit of trampling of the Constitution, but the bailout bill passed, as I suspected it would. The bailout failed the first time it was brought to the House. Undaunted, the Senate pressed on by attaching the bailout as an amendment to another House passed bill that was pending in the Senate. The new bailout version had new taxes, so according to the Constitution it should not have originated in the Senate. The rallying cry heard all...

Monetary base jumps to 939.472 from 874.750 for two week period. From September 10 till the 24th the Fed added nearly $65 billion dollars in High Powered money. At an annual rate, this is a jump of more than 500%.

I'm sorry for the vanity but I have a question for our economists on this site. I'm in the process of moving at least some of my investments into more secure holdings. However, I was wondering if it would be possible that pumping $1T into the economy could trigger hyperinflation. I've been reading through this issue on various sites and it seems that some feel that hyperinflation could be trigger by the government failure to find buyers or pumping large amounts of dollars into the economy without proper tax revenues. Has there been any serious thought given about this issue...

When Sen. Chris Dodd (D-CT) gavels in the Senate Banking Cmte., he is expected to pro- pose changes to the Bush admin.'s $700 billion intervention in the financial markets. Witnesses include Sec. of Treasury Henry Paulson; Ben Bernanke, Chair of the Federal Reserve System; and others

Given last week's dramatic events — the bankruptcy of Lehman Brothers, the end of Merrill Lynch's independence, and an $85 billion US-government bailout of insurer AIG — most financial institutions are likely to become more sensitive to the state of their net worth. For instance, all it takes for a financial institution that has a net worth of $30 billion and assets of $600 billion to go under is for the value of assets to fall by 5%. In the current financial climate, it can easily happen; hence, most financial institutions are not immune from the potential threat of going...

Financial crisis to boost prices on food 30 percent up 18.09.2008 Source: Pravda.Ru URL: http://english.pravda.ru/russia/economics/106392-financial_crisis-0 The current financial crisis will strike a significant blow on Russia, the former vice prime minister of the Russian government, Boris Nemtsov said in an interview with Novy Region news agency. The prices on basic foodstuffs may rise 30 percent, whereas small banks will go bankrupt, and many Russians will thus have to forget about consumer loans. September has become a black month for Russia, Nemtsov said. The politician advised all Russians should purchase foreign currency, particularly US dollars, to rescue their savings. The crisis...

WASHINGTON (AP) -- Consumer prices in August posted the first monthly decline in nearly two years as Americans finally get a break from surging energy prices. The Labor Department reported Tuesday that consumer prices edged down 0.1 percent last month, a significant improvement from a 1.1 percent price spike in June and a 0.8 percent rise in July. The cost of gasoline and other fuels have plunged, reflecting big drops in crude oil prices.

In an interview with the Taylor Daily Press, State Sen. Steve Ogden revealed a possible new course for the controversial Trans-Texas Corridor. Instead of building superhighways across the state, Ogden said, the state may opt to augment the Texas Trunk System, a web of rural highways that includes U.S. 79. The plan would expand those highways to four-lane divided highways, while expanding urban infrastructure with toll roads. “We need to limit that concept to existing highways,” Ogden said of the proposed network of superhighways and tiered rail systems. “I passed a bill last session that did that, but [Gov. Rick...

WASHINGTON (AP) -- Wholesale inflation plunged in August by the largest amount in nearly two years, reflecting a steep drop in energy prices. But in less positive news, retail sales remained in the doldrums in August. The Labor Department reported Friday that wholesale prices fell 0.9 percent last month, nearly double the 0.5 percent decline that economists had been expecting. The price moderation followed three months in which wholesale costs had shot up at levels exceeding 1 percent a month as energy costs had surged. Snip...The 0.9 percent drop in wholesale prices, the largest one-month decline since October 2006, could...

In recent months, investors have been unjustly chastised for their lack of consistency. In truth, they have an unblemished record of drawing the wrong conclusions. Last week’s 2nd quarter GDP report provides the freshest evidence of market cluelessness.... Without raising an eyebrow on Wall Street or in the press, the GDP deflator, used in the report to downwardly adjust GDP to account for inflation, was shown at just 1.2% annualized.... the lowest deflator in ten years. In other words, to arrive at a 3.3% growth rate, the government assumed that inflation is running at a ten-year low! In contrast, the...

OBAMABIKE - No Inflation required

Monthly salaries in Sweden averaged 25,800 kronor ($3920) last year, an increase of 800 kronor compared with the previous year. Women’s salaries amounted to 84 percent of men’s salaries on average, unchanged from the year before, according to new figures from Statistics Sweden. In 2007, public sector workers earned an average of 23,900 kronor per month, a 500 kronor improvement from 2006 salary levels. Meanwhile, private sector salaries improved by twice as much, landing up 1,000 kronor to 26,700 kronor per month on average.

LONDON (AFP) – The euro on Tuesday slid below 1.45 dollars for the first time since February as the market anticipated lower interest rates in the eurozone and stronger growth in the United States, analysts said. In early London trade, the European single currency dropped to 1.4467 dollars, the lowest point since February 12. It rose from this level to trade at 1.4524 dollars in late European trade, compared with 1.4606 dollars late on Monday in London. Elsewhere, the yen fell slightly after Monday's abrupt resignation of Japanese Prime Minister Yasuo Fukuda. The pound meanwhile struck a record low versus...

Barack Obama's tax advisers recently posted a piece in the Wall Street Journal about their candidate's tax plans. Their article was designed to triangulate, painting their candidate as a tax cutter and the Republican opposition as a secret tax raiser. It was well written and well argued — not that you can really trust anything you read about what candidates will or will not do once in office. In any case, I was discussing the piece with a person whose politics are certainly left of center. She said to me something along the following lines: I'm really not sure I...

Perhaps the most sensible voting member, Dallas Fed President Fisher thinks there is a 50-50 chance our recent inflation spike is a "one-off" event: "The real concern I have as a central banker is whether or not [inflation] begins to affect the mentality of spending patterns by consumers [and] pricing patterns by producers...I don't know the answer to that question - it's sort of 50-50" whether the inflation gains will prove a "one-off event

WALL ST. SHIFTS BLAME FOR CRISIS TO STUPID INVESTORS By JOHN CRUDELE August 21, 2008 -- YOUR investments could look like a pack of cigarettes if the government takes the advice of a blue-ribbon panel of experts. In a report sent recently to Treasury Secretary Hank Paulson, a panel headed by Goldman Sachs Co-Chairman Gerry Corrigan suggested that complicated investments "must have a financial health warning displayed prominently in bold print." Ironically, the recommendation is the product of top executives from Lehman Brothers, JPMorgan Chase, BNP Paribas, Bank of America, Merrill Lynch and several others - all of which either...

Consumer prices are rising at their fastest pace in more than a decade in both the U.S. and the euro zone. But it's affecting workers on the two sides of the Atlantic in very different ways. Unions are more powerful in the 15-nation euro zone than in the U.S., and many laws and practices there are more worker-friendly. That's part of the reason why many European workers are keeping up with inflation better than their U.S. counterparts. Wages and salaries in the euro zone were 3.4 percent higher in the first quarter than in the year-earlier period, matching the first-quarter...

THE FED Bernanke sends soothing message on inflation Fed chief says price pressures likely to moderate this year and next JACKSON HOLE, Wyo. (MarketWatch) -- Federal Reserve Chairman Ben Bernanke sent a soothing message to global markets Friday, saying inflation was on track to moderate in coming months, and triggering a rally in stocks on speculation that means the Fed will keep interest rates low for the near future. Recent developments in commodity prices and the dollar, combined with slower growth, should lead inflation pressures to ease, Bernanke told policymakers and leading economists attending the Fed's annual retreat in Jackson...

Warning: Worldwide wipeout ahead Think US stocks are on a life raft? Look around the globe, where seas are much rougher. This is serious, folks. Brace for a brutal riptide of more economic upheaval. By Jon Markman It barely seems possible that anyone is more pessimistic about corporate earnings prospects than American shareholders right now, with the U.S. stock market down almost 15% for the year and the banking system coming unglued before our eyes. Yet if you take a moment to look around the world, you may be surprised to learn that U.S. stocks are the picture of health...

WASHINGTON -- U.S. consumers should brace for the biggest increase in food prices in nearly 20 years in 2008 and even more pain next year due to surging meat and produce prices, the Agriculture Department said Wednesday.

Johnny Carson might have quipped about the economy, "Inflation is so bad these days… that pennies are now selling on the street for two cents." This joke may not be all that funny, even with the great Carnac delivering it, but it does have the underpinnings of good comedy: an absurd story based on a kernel of truth. Old pennies are routinely traded at premium prices, sometimes twice or more their face value. This is not because they are rare or precious — they were minted by the tens of billions — but simply because they are worth more as...

NEW YORK (Reuters) - A buying spree in the popular American Eagle bullion coins appears to have depleted inventory of major North American coin dealers, contributing to supply fears and sharply higher gold prices on Thursday. Coin dealers in the United States and Canada said buying of gold coins and other bullion products has soared since last week as gold prices tumbled to near a nine-month bottom. Blanchard and Co., one of the largest U.S. retail dealers of rare coins and precious metals, said the American Eagle and American Buffalo one-ounce gold coins -- novel items among collectors and investors...

Food prices to post biggest rise since 1990: USDA By Christopher Doering Wed Aug 20, 5:43 PM ET U.S. consumers should brace for the biggest increase in food prices in nearly 20 years in 2008 and even more pain next year due to surging meat and produce prices, the Agriculture Department said on Wednesday. Food prices are forecast to rise by 5 percent to 6 percent this year, making it the largest annual increase since 1990. Just last month, USDA forecast food prices would climb between 4.5 and 5.5 percent in 2008. "It's a little bit of a surprise how...

For India's Tech Titans, Growth Is Waning By NIRAJ SHETH August 20, 2008; Page A1 NEW DELHI -- India's information-technology industry, the engine of the nation's economic resurgence, is losing steam. A decade ago, a host of Indian companies -- led by Infosys Technologies Ltd., Wipro Ltd. and Tata Consultancy Services Ltd. -- shot to global prominence by helping fix the "millennium bug" that threatened to crash many of the world's computers at the end of 1999. Often growing at 40% a year or more since, they quickly helped build a global tech-outsourcing industry that has changed how the world...

Inflation at the wholesale level is running at the fastest annual pace since 1981, with a 9.8 percent gain over July 2007...

Growing evidence suggests American consumers, businesspeople, and political leaders should all be bracing for double-digit inflation, probably as early as 2009. The relative price stability of the past 15 years is giving way to worsening inflation, despite the recent softening of oil prices. The Consumer Price Index for all items shows the inflation rate averaged 2.6% a year from 1992 through 2007 but has doubled since January, reaching an annual rate of 5.6% in July (BusinessWeek.com, 8/14/08). By next year, the monthly figure could hit double digits, and the inflation rate for 2009 overall could triple 2007's 2.85%. ... The...

Editorial: How China's inflation wallops us 12:00 AM CDT on Thursday, August 14, 2008 As an inflation hawk, Richard Fisher, the president of the Federal Reserve Bank of Dallas, is a bit worried about the day the Olympic flame is extinguished. Mr. Fisher, a member of the Federal Reserve committee that influences U.S. interest rates, says China is about to face an inflation conundrum that the Olympics temporarily is holding in check. Beijing tamped down worker wages and subsidized energy to make sure the world sees China in the best possible light. But pressures from rising demand in China aren't...

The week that risk became reality Published: August 15 2008 19:31 | Last updated: August 15 2008 19:31 Trouble has been in prospect ever since the credit squeeze began last summer, but this was the week when both shoes dropped at once, everywhere from the UK to Japan and most points between. For decades, a concerted world slowdown would have only one cause: a US recession. That is no longer entirely true. To paraphrase Tolstoy, each unhappy economy is unhappy in its own way. Japan has begun to contract, and plummeting exports are not the sole culprit: domestic demand is...

Thursday’s report on consumer inflation helps to confirm what many American households have suspected for months — that rising prices are forcing consumers to lower their standard of living to make ends meet. U.S. consumer prices shot up faster than expected in July, fueling the biggest year-over-year jump in more than 17 years, according to the latest government data. Prices were 5.6 percent higher in July than they were a year earlier. Energy prices were up 29.3 percent for the year and food costs were 6 percent higher. Excluding volatile food and energy items, the so-called core CPI rose 0.3...

U.S. Inflation Hits 17-Year High As Increases Move Beyond Food, Oil By BRIAN BLACKSTONE August 14, 2008 9:15 a.m. WASHINGTON -- U.S. inflation soared to a 17-year-high annual rate in July, a government report showed, led by gains in food, energy, airline fares and apparel. Separately, the number of U.S. workers filing new claims for unemployment benefits fell slightly as expected last week but remained at high levels consistent with a rapid erosion in labor markets.

Stocks slide to lowest in 19 months Last Updated(Beijing Time):2008-08-12 07:21 Led by a plunge in metal and energy stocks, the benchmark index of the Chinese stock market Monday lost more than 5 percent to fall to its lowest level in 19 months amid growing concern about a slowing economy. Massive unloading of Olympics-related stocks, such as tourism and catering, also weighed down the key indicator. A man at a securities house in Huaibei, Anhui province August 11, 2008. The Shanghai Composite Index plunged 5.21 percent to reach a 10-month low. [Asianewsphoto] The benchmark Shanghai Composite Index slid 5.21 percent...

Crude Oil Change -3.80 116.22. Other commodities down across the board.

Companies throughout the food chain are changing the way they do business in response to soaring grain costs, and consumers are likely to bear the brunt in the form of rising food prices. Farmers are making the broadest cuts to their livestock herds in decades, meaning meat at the supermarket will likely cost more in coming years. Middlemen are trying to shorten the duration of supply contracts to 90 days from one year so they can pass on higher costs more quickly. And food brands are shrinking the contents of their packages, from ice-cream cartons to beverage containers. ...In another...

Our economic system — the market economy or capitalism — is a system of consumers' supremacy. The customer is sovereign; he is, says a popular slogan, "always right." Businessmen are under the necessity of turning out what the consumers ask for and they must sell their wares at prices which the consumers can afford and are prepared to pay. A business operation is a manifest failure if the proceeds from the sales do not reimburse the businessman for all he has expended in producing the article. Thus the consumers in buying at a definite price determine also the height of...

Everybody Gets a TrophyEconomic perils of the Nanny StateBY TONY ALLISONLet me take you to a magical land called NannyState, where once upon a time everyone was happy, inflation was low and real estate always went up. Or did. Times are a’ changing in NannyState and all is not well.   Everyone was elated in NannyState in 2002-2006, because real estate really went up. Way up. There was no need to sacrifice or save because you could buy a home with no money down. Everyone could enjoy the American Dream! In fact, banks offered a 125% loan so you could upgrade...

The event with the greatest political ramifications for the next president may have taken place at the Federal Reserve's last meeting in June.The Fed's explicit inflation concerns implicitly warned of coming interest-rate hikes. Coupled with the expiration in 2011 of the 2001 tax cuts, this could be a devastating one-two punch to the economy and the next administration. The economic circumstances are similar to those Ronald Reagan faced in 1981. But the next president will face them without the advantages Reagan had 27 years ago. The Fed's latest announcement was very clear. "Uncertainty about the inflation outlook remains high," it...

SOME VERY IMPORTANT POINTS ABOUT INFLATIONWe expect that we will soon be seeing inflation data show that inflation in China and other parts of Asia is moderating. All that this means is that the rate of inflation, which was for example 11% for the last 12 months, may be falling to 6 % for the next 12 months. Inflation is a rate of change calculation. When you have a high rate of change in year One and it goes to a lower rate of change in year Two, then the data says inflation is lower. However, prices are not lower....

Letter from Zimbabwe sent by John Winter I reckon that these are the last days of TKM and ZPF. The darkest hour is always before dawn. We are all terrified at what they are going to destroy next… I mean they are actually ploughing down brick and mortar houses and one white family with twin boys of 10 had no chance of salvaging anything when 100 riot police came in with AK47's and bulldozers and demolished their beautiful house - 5 bedrooms and pine ceilings - because it was "too close to the airport", so we are feeling extremely insecure...

Want to get an idea why Democrats have no clue on energy policy? Take a listen to Barack Obama explaining how we can get an extra 12 million barrels of oil a day. We can pull it out of thin air — literally: "There are things you can do individually, though, to save energy. Making sure your tires are properly inflated — simple thing. But we could save all the oil that they’re talking about getting off drilling — if everybody was just inflating their tires? And getting regular tune-ups? You’d actually save just as much!" Er, no it couldn’t....

When Dr. Doom speaks, we should listen JOHN HEINZL jheinzl@globeandmail.com E-mail John Heinzl | Read Bio | Latest Columns July 29, 2008 When CNBC or Fox needs a guest who can be counted on to deliver a thoroughly gloomy outlook for the U.S. economy, they call on "Dr. Doom." To say Peter Schiff is bearish is like saying Tiger Woods is an okay golfer, or China has a small problem with air quality. The president of Connecticut-based Euro Pacific Capital Inc. is so pessimistic about the U.S. economy that he lives in a rented house and keeps the vast majority...

Hard Assets Investor keeps track of the Breakfast Index (see "Inflation: Tears In Your Coffee") as a counterpoint to the official CPI/PPI figures. Inflation, measured by either the government's methods or by our own homegrown metrics, boils down to the loss of purchasing power. If your George Washingtons buy you less food or petrol now than they did a year ago, that's evidence of inflation. The government plays a much bigger role in the inflation drama that that of a mere reporter. As it sets monetary and fiscal policy, the government is, in fact, an agent of inflation. The effect...

Hopes for the US economy were lifted on Friday by new data pointing to lower inflation expectations, stabilising new home sales and a stronger manufacturing sector. The reports helped calm the US stock market after an ugly sell-off on Thursday spurred by renewed concerns about the health of the financial sector and the housing market. By the close in New York, the S&P 500 was up 0.4 per cent. The Reuters/University of Michigan index of consumer sentiment unexpectedly rose in July after hitting its lowest level since the early 1980s last month. It hit a level of 61.2 as oil...

Inflation figures are always a little slippery, but the government of Robert Mugabe in Zimbabwe has managed the virtually impossible feat of generating a hyperinflation that has exceeded that of the Wiemar Republic of the 1920s. From The Rand Today: As the woes continue in Zimbabwe, the central bank’s governor in Zimbabwe, Gideon Gono said today, “Statistics provided by the CSO (central statistical office) indicate that it is now at 2.2 (million percent).” This referring to the rate of inflation in the country. This is clearly the highest rate of inflation in the world. And this figure released of 2.2m%...

The ethanol industry, until recently a golden child that got favorable treatment from Washington, is facing a critical decision on its future. Gov. Rick Perry of Texas is asking the Environmental Protection Agency to temporarily waive regulations requiring the oil industry to blend ever-increasing amounts of ethanol into gasoline. A decision is expected in the next few weeks. Mr. Perry says the billions of bushels of corn being used to produce all that mandated ethanol would be better suited as livestock feed than as fuel. Feed prices have soared in the last two years as fuel has begun competing with...

Gold Drops 4% to Hit Two-Week Low as Dollar Bounces, Oil Sinks, Bear-Market Rally in Stocks Continues -- Posted Wednesday, 23 July 2008 | Digg This Article | Source: GoldSeek.com London Gold Market Report from Adrian Ash THE PRICE OF PHYSICAL Gold dumped another $12 per ounce Wednesday morning in London, falling more than 4% from yesterday's four-session high. World stock markets continued their sharp rally, meantime, with Europe's 300 largest shares just climbing out of the 20% bear-market loss that hit between Nov. and June. Crude oil fell towards $126 per barrel. The US Dollar pushed the Euro down...

The Fed's "beige book," a roundup of reports from the 12 regional Fed banks released every six weeks, shows economic activity is weak across most of the U.S. and companies are increasingly worried about growth in the coming months. Despite the $107 billion in economic-stimulus checks that have been doled out to millions of Americans since late April, the report said consumer spending was reported as mixed, weak or slowing in nearly all districts. In the Philadelphia region, for example, "despite what one store executive termed 'very large markdowns' on many types of merchandise, total sales have fallen below the...

The vast majority of Americans share the concern of senior Federal Reserve Board officials that inflation is a very real threat in the year ahead, according to a new Rasmussen Reports national survey. Eighty-four percent (84%) of adults are worried about the threat of rising prices. Nearly half (47%) rate themselves Very Worried. Over half of Americans (54%) see high inflation as the bigger short-term problem for the U.S. economy, as opposed to 30% who view job creation that way. Similarly, 44% rate inflation as the larger long-term threat as well, but nearly as many (41%) see job growth as...

Raiding the Retirement Stash By Michelle Singletary Sunday, July 20, 2008; Page F01 Would you still put money in a tax-advantaged retirement fund if you couldn't touch it until you retired? And when I say you couldn't touch it, I mean you couldn't take out loans or withdraw funds under any circumstances. If Congress were rewriting the rules for 401(k) s and similar retirement plans, that's what the Washington-based Pension Rights Center would recommend. Why this hard stance from a consumer-oriented group that works hard to protect and promote retirement savings? A new study found that an increasing number of...

Gordon Brown’s rule book goes into dustbin of history Economic Outlook: David Smith ON my bookshelf there is a tome I have been meaning to dip back into for some time. It is called Reforming Britain’s Economic and Financial Policy. Written by Ed Balls, then Treasury chief economic adviser, now in charge of what used to be the education department, and Gus O’Donnell, then head of the government’s economic service, now head of the civil service, it was intended to be the bible of new Labour macroeconomic policy. The foreword was by Gordon Brown, who was inspired by his own...