World's economies tumbling like dominoes

MSN Money ^ | 02/23/09 | Bill Fleckenstein

[TigerLikesRooster]

World's economies tumbling like dominoes

/snip

By Bill Fleckenstein

MSN Money

Lately, I have been struck by how bleak and black the newspapers have been in their coverage of the economy. Not that I've been surprised, but one can never know when events in the economy will coalesce into the news that causes the masses to realize how difficult the environment is.

In reading the papers, it was obvious to me that it's becoming clear to everyone that "the next time down" is well under way, though the average person wouldn't call it that.

1980-82 versus now

I was trying to remember the last time I had seen the economic news quite as ugly. For me, the 1980-82 period is the closest example I have lived through. Of course, it was quite a bit different. Many of the problems were a function of sky-high interest rates induced by then-Federal Reserve Chairman Paul Volcker (a consequence of money-supply targets, not interest-rate targets) to break the back of inflation. Also, the world looked a lot different, as the Soviet Union was still in existence and capitalism was not yet a gleam in the eye of the communists in China.

What we are now dealing with is roughly 20 years' worth of massive speculation and excess leverage, championed by the United States and mimicked by other countries around the globe. It appears the potential for the newest round of financial weakness is being precipitated by economic problems in Eastern Europe, which are impacting the European banks, especially German ones.

We are at the stage now where economic weakness is feeding back into everything, making the situation more difficult for banks everywhere. And, it's becoming clear to nearly everyone that many banks are not just illiquid but insolvent.

[TigerLikesRooster]

* "It is not that the free market failed. The mistake was constant interventions in the free market by the Fed and the U.S. Treasury that addressed symptoms and postponed problems instead of solving them."

* "Further interventions through ill-conceived bailouts and bulging fiscal deficits are bound to prolong the agony and lead to another slump -- possibly an inflationary depression with dire social consequences."

[TigerLikesRooster]

Ping!

[dennisw]

Bill Fleckenstein has been a sober gold advocate for years. He also famously called Alan Greenspan an old hippie who ran the Fed like a hippie commune

[Caipirabob]

HA! HA! I WON!!!

[GiovannaNicoletta]

bookmark for later

[Vaduz]

Import more than export what could go wrong with that idea!

[1rudeboy]

Bill Fleckenstein has been a sober gold advocate for years.

Umm, no.

[1rudeboy]

I wish someone would post Fleck’s columns more often.

[expat_panama]

Maybe Fleckenstein's done better in previous tracts.  Off hand, this one came on (to me at least) with the same old feelings/me/now approach to business.  I like feelings as much as the next guy, but for my understanding a good dose of numbers is needed first--

--and then  we let the feelings follow along....

[dennisw]

Bill Fleckenstein has been a sober gold advocate for years.

Umm, no.
___________________________

Yes he has .... I’ve read his stuff for years

[dennisw]

Here is Bill Fleckenstein writing for an uber gold bug organization...GATA

http://www.gata.org/node/2207

[1rudeboy]

Fleckenstein is a columnist. He doesn't "advocate" commodities, or anything else. Fleckenstein Capital might take a position in precious metals, but he sure as heck bends over backward in favor of disclosure whenever he discusses it. I think he would be insulted to be called a "sober gold advocate for years."

He would probably warn his readers about "irrational valuation" of anything at anytime.