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Economic Crisis "The Worst Is Yet To Come!”

Economics / Inflation Mar 22, 2009 - 05:39 PM GMT

By: David_Vaughn

Economics Best Financial Markets Analysis ArticleWhat's happened to gold? Is it still out there? You better believe it is still out there and will continue to be “out there” and for a very long, long, time. What are the banking gurus predicting for gold?


“Merrill Lynch says that gold can lift another 50 per cent; Merrill Lunch suggests it can go from about $US975 today to $US1500 in 12 to 15 months.” theage.com.au/world/golds-promise-draws-dreamers-schemers-and-sceptics-20090221-8e84.html

Well, looks that ol' Dow Jones average is on its way down to 6,000. And how much lower from there? We truly live in interesting times. Consumer bankruptcy has jumped almost 30% in February from a year ago. The Dow Jones is volatile and wanting to head lower. Fed Reserve Chairman Ben Bernanke has warned Congress that the economy could be in the dumps for years possibly because the financial system continues to deteriorate.

"The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been indulged since the 1940s: depression." nytimes.com/2009/02/28/business/economy/28recession.html?_r=1

Home sales are falling to new lows. Car sales are continuing to go down hill driving many auto manufacturers close to bankruptcy. So many people are out of work. Tons of homes are worth less than the existing mortgage. Almost 700,000 jobs lost in February alone. Savers are trying to learn to save money outside their 401K plan. Have to with 50% losses on most 401K portfolios.

"Gold is not a safe haven against recession," said Hutchinson . "It's a safe haven against inflation." “But it also reveals another wild card inflationary indicator that Hutchinson believes carry gold prices to $1,500 an ounce by the end of 2009” “… Hutchinson believes carry gold prices to $1,500 an ounce by the end of 2009.” moneymorning.com/2009/02/16/2009-gold-outlook/”

US senators are proposing an investigation to determine why the economy is tanking. I feel comfortable already.

“Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis.” "Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half…” "This is absolutely unprecedented in our Lifetime." agonist.org/20090311/45_percent_of_worlds_wealth_destroyed_blackstone_ce

Maybe Congress just needs to talk to the average American on the street. Are we in a depression or a recession? How is a depression being defined now? A depression is thought to be a recession that does not self correct on its own created by an enormous trade deficit and banks going bankrupt. Sounds like we are now in a depression to me. AIG is continuing to plead for more billions.

“Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.” “Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union .” "We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom." "I don't remember any time, maybe even in the Great Depression, when things went down quite so fast…” boston.com/news/nation/articles/2009/02/21/soros_sees_no_bottom_for_

There's a global swing developing toward gold and gold exploration stocks. Gold and silver mining stocks are priced at 400 dollar gold level. I have not written a lot these past six months. The occurrence of last fall left me in a state of shock I am still trying to absorb. Since 1997 I had come to understand that these days of financial collapse were coming, but still, when they financially come they still take you by shock. It's like knowing that death awaits us at some time down the road and around the corner. Yet, the day that death comes we are still never really prepared.

Jim Rogers – “If gold goes down for whatever reason then I will buy more.” - jimrogers-investments. blogspot.com/2009/03/gold-and-silver-outlook.html

And I can state with certainty that everyone around this vast globe has been reeling in the after shocks of this financial earthquake. Who can ever really be prepared for the death of a loved one? Even when we watch that patient die a slow and horrible death in hospice. And so has gone our economy. A slow and painful death to observe. Before we were moving along in first gear so to speak for years on end. But then the fall of 2008 came and our world shifted into over drive. And that is where we are today.

We are in over drive and with no working effective brakes to slow us down. I believe that regardless of which political party may have come into office in January, 2009, it would have been too late for any real meaningful policy to come in to play that could have stopped this ongoing carnage. And rest assured that this ongoing carnage has a very long way to go. Even today the Chinese are voicing and making themselves heard world wide that they are becoming more and more afraid to continue financing the great US debt machine.

I guess you know by now that Paul Harvey died just a short while ago? I guess that confirms all by itself that we are now in a new terrible era. Totally in an uncharted area without Paul Harvey to guide us.

“End of An Era: Radio Pioneer Paul Harvey Dies at Age 90” “Paul Harvey, once known as the most listened to man in radio, has died at the age of 90 at a hospital near his winter home in Phoenix”. “From his humble beginnings as a teenager helping out cleaning up at a local radio station, Harvey went on to have his broadcasts carried by 1,350 commercial radio stations, as well as 400 stations of the Armed Forces Radio Service.” mashget.com/top-stories/2009/02/28/end-of-an-era-radio-pioneer-paul-harvey-dies-at-age-90/

I grew up on “Paul Harvey.” I used to race to the radio years ago to hear Mr. Harvey state “Good morning America ! It's Friday!” Well, now no more Fridays for Paul. Just eternal gold streets and a golden microphone. Rush Limbaugh eat your heart out! Where do we cry from here? And now I hear 75 year old James Dobson is stepping down from his place in the sun also. As I said before, an entire generation is dying and a new one coming into bloom. Of course that new generational era bloom will be in the prickly shape of a Texas cactus. The prince of darkness has definitely arrived in town. Not just in your town and mine, but the entire globe.

Sure, a lot of that which has been lost may have been paper. But so what? Its paper that we use as currency and pretend that it is real wealth. Who is going to ride in now and save us? It sure will not be either of our existing political parties. They created and fed this crisis. Yes, the world we once knew is changing. Can't go back there. New rules and new problems. A new age. The new age of the 21st century. And the sooner we grasp this important fact the greater chance we will have to survive. And I am talking about surviving financially, emotionally, and psychologically. Never do any of us accept change well. We generally long for the nostalgia of yesterday. Yet, it is so important often to let the past go and move forward and accept the change that comes with it.

And don't forget the Chinese are getting closer and closer to the day when they cease to continue to finance the US debt. That day should be interesting. And as we have said before all of these events will trigger an inflation rate we have not witnessed for a long time.

“The Chinese are getting nervous about buying U.S. Treasurys.” “…Chinese Premier Wen Jiabao, who expressed concern that the more than $700 billion in Treasury debt his country holds is at risk of seeing its value fall due to rising budget deficits here.” "We have lent a massive amount of capital to the United States , and of course we are concerned about the security of our assets," said Wen…” "To speak truthfully, I do indeed have some worries." money.cnn.com/2009/03/16/news/economy/fed_meeting/index.htm

There really is nothing shocking happening today because many recognized these existing trends even 20 years ago. The old blacksmith in 1909 had to recognize that the new vehicle operating on the streets that required no horse was going to change his business drastically. The innovative blacksmith would have opened a car dealership to survive and even to prosper with the changes the new automobile with the internal combustion engine was bringing. There were only four registered automobiles in the United States in 1895. Horses were first offered as trade ins for the new automobile. Ransom E. Olds was the first mass producer of gasoline powered automobiles.

“The economic crisis and complete lack of competence from our leaders has resulted in a current financial climate that will result in the most fantastic run the price of gold has ever experienced.” oxburyresearch.com/tag/gold-demand-2009/

The following bit of trivia is interesting. In the beginning the automobile suffered from a shortage of the availability of petroleum. The creator of the first Cadillac became interested enough to procure a supply of gasoline for his cars that he become a self-taught geologist and eventually discovered major oil deposits in Kansas . I suppose what I am getting at here is the necessity of looking at our world today and determining what new innovative technologies are going to grow as the years progress. I continue to be amazed that the Internet really came into its own in 1995. What, a mere 14 years ago? Change is happening all around us and we have to accept it and grow with it.

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David Vaughn
David4054@charter.net

The future legacy of the United States will be the refined art of financial leverage.

© Copyright 2009, Gold Letter Inc.

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”  

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2008, Gold Letter Inc.

David Vaughn Archive

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Comments

thowze
22 Mar 09, 21:35
carnage

"We are in over drive and with no working effective brakes to slow us down. I believe that regardless of which political party may have come into office in January, 2009, it would have been too late for any real meaningful policy to come in to play that could have stopped this ongoing carnage. And rest assured that this ongoing carnage has a very long way to go."

I couldn't have said it any better!


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