Four Signs The Economy Isn’t Getting Better
The stock market may have improved, but that is simply the value of companies, not the value of the economy. The vital signs of the US economy may as well be running flat, the automakers are going into bankruptcy, banks can legally “cook the books” and there are some very scary things happening in the market as we speak. Here’s just four signs the economy isn’t getting better…
Sign Number One: Zero Faith In The Economy
In an economy backed by confidence and sky-high energy prices, faith is something you can bank on. Currently there is little faith in the US Government and the US Dollar. Investors are flocking out of treasuries and out of the dollar to alternative currencies such as the Euro and the Pound. This flight of safety is sending treasury yields rocketing and currency pairs are exploding.
Just four months ago I was peeking at the GBP/USD pair. At that time the pair traded for 1.38, today its more like 1.62. That’s not pretty, especially considering our currency is falling against one literally backed by the world’s financial institutions. Not good.
Sign Number Two: Commodities Are Surging
Commodity prices have been far from stagnant. First, silver posted its best month in 23 years. Oil racked up massive gains to close at $66 per barrel. And gold has been performing like gold, and will soon likely touch $1000 an ounce before hopefully slamming right through. The fear of deflation is no more, we’re worried about inflation only.
Sign Number Three: The President Declares “We’re Broke”
The final sign is that the US government has been declared bankrupt by its most important politician. In an unnoticed interview with CSPAN the president declared that the nation is broke. But, to save money, our only option is a new, multi-trillion dollar health care plan. Couple that with a new federal sales tax, and the economy is on its last breath. This is the scariest of them all, with the government now accounting for one-forth of GDP spending, we’re certainly on the verge of losing our “free” status.
Sign Number Four: The Fed Is Losing Its Mind
The Federal Reserve seemingly can’t understand why people don’t want to buy our debt. They can’t figure out why the yield curve is steepening or why investors are afraid to buy Treasuries. Is it because the US has been declared broke ( see number 3) or is it because investors have ZERO faith in the US economy (see number 1). Hmm…
There were many other things I could have included in this list. Here’s some runners up:
GM and Chrysler are toning down their operations
We’re still shedding jobs
real estate is going no where
Its not pretty folks. But as an investor you’re capable of protecting yourself by moving assets around. Sell the dollar, buy commodities and be wary of any US stocks. Plain and simple, there are hundreds of countries in this world, so take your money elsewhere.
Although I agree that this is another case of the fed trying to pull the wool over our eyes I am wondering this: what can we do about it? I mean in this scenario we the American people are the nerdy kid getting shoved into our locker by the big bully that is government. Notice they are saying nothing about resource management right now, what about all those special interest groups that are raking it in with the new push toward “green”. What next, they start nationalizing mineral and oil rights?
I totally agree with you. Lately I’ve kept an eye on agricultural commodities, which have also been through the roof.
@Pete Steinhibler
That’s for sure. Here in my area, many corn and bean farmers have yet to plant due to flooding. Supply in the bread belt is going to be lower than normal.